ERS Syndicate 218 at Lloyds v Motorshifter Limited (in liquidation) & Anor.

Where an insurance policy comprises a schedule and a certificate, the documents should be read together only so far as they can be reconciled consistently with the policy’s structure and commercial certainty. A certificate of motor insurance is principally statutory evidence of the policy and does not ordinarily create additional cover. Where the schedule clearly identifies the insured vehicles and permitted use, conflicting generic wording in the certificate yields to the schedule unless the contract contains clear words giving the certificate wider contractual effect.

The claimant insurer sought a declaration that it was not liable to indemnify Motorshifter Limited or its employee for liabilities arising from a serious road accident. Motorshifter’s policy comprised, among other documents, a policy booklet, schedule and certificate of motor insurance. The schedule identified 20 trade plates and stated that use was for the business of the policyholder. The certificate referred more broadly to vehicles owned or controlled by the policyholder and permitted social, domestic and pleasure use.

The vehicle involved in the accident was not displaying trade plates, and the parties agreed that it was being used for social, domestic and pleasure purposes. The central issue was whether the policy covered that use despite the wording of the certificate.

1. Declaration granted. On the proper construction of the policy, the claimant was not liable to indemnify the employee or Motorshifter in respect of liabilities arising from the accident.
2. The policy was to be construed objectively, by asking what a reasonable person with the relevant background knowledge would have understood the contractual language to mean. The schedule and certificate formed part of the contractual documents, but their functions were different.
3. The schedule identified “the vehicle” insured and the cover applying. Its detailed identification of 20 trade plates, calculation of premium per trade plate, driver restrictions and excess provisions showed that it was intended to have exclusive effect on those matters. Reading the schedule and certificate cumulatively would undermine commercial certainty and require generic certificate wording to expand bespoke schedule terms.
4. R & S Pilling (trading as Phoenix Engineering) v UK Insurance Ltd was materially relevant. The certificate certified the legal effect of the policy but did not provide additional insurance cover. Its statutory purpose and distinction from the policy meant that a certificate would need clear words before being treated as expanding cover already defined by the schedule.
5. The definition of “insured vehicle” referring to a vehicle shown on the schedule or described on the certificate did not require aggregation of inconsistent descriptions. In context, it reflected the assumption that the documents would identify the same vehicles.
6. The policy therefore covered only vehicles operating under the specified trade plates and permitted business use. Since the accident vehicle had no trade plates and was not being used for business purposes, the policy did not respond.