The Financial Ombudsman Service issued new rules this week following a spate of disputes between insurers and car owners over thefts involving keys left in the ignition.
Motor insurers argue it is a clearcut case. They say owners who leave keys in the car are reckless and do not deserve a payout. And, the insurers add, they firmly warn drivers about this.
But now a mix of legal rulings and FOS decisions could, in some circumstances, give new hope to theft victims with rejected claims. Jane Sandland was in a pub near her Exeter home in late May when her handbag was stolen. "There was all the usual stuff ... my home keys, car keys, driving licence, plastic cards and cash. I went to the police who told me to change my front door lock. I did this myself for around £15," she says.
But 10 days later her 1993 Renault Clio was stolen from outside her house. "It's worth under £1,000 so I only insure it third party, fire and theft," says Ms Sandland, who works for a charity combating homelessness in Devon. She made a claim on insurer Provident Financial which specialises in women owners and cars of lower value.
"They turned me down. They said I had taken no steps to safeguard my car and claimed I failed to secure it although it was locked with my other key," she says.
Provident relied on a policy clause which said it will not pay a claim for "loss or damage through theft, or attempted theft, when nobody is in your vehicle, unless all the doors, windows and other openings are closed and locked, the vehicle's keys are removed, and the electronic or mechanical security devices are set".
"I wanted to argue I had kept to all these conditions, but they also hit me with a catch-all clause about 'reasonable steps to prevent loss or damage'," she adds.
Provident wrote: "We therefore have to formally confirm that we are not prepared to offer indemnity for the theft of your vehicle."
Jobs & Money took up her case. We argued no one - police, victim support - or any insurance company's general or specific publicity had considered the particular circumstances of the theft.
Therefore, it was unreasonable to expect her to know she might be liable. Replacing the locks would also be out of all proportion to the value of the car.
"Getting a new set of electronic locks for an old Renault, plus the complicated fitting, would cost £500 - nearly as much as the car. My local repairer could not do this and it would have taken some time for a main agent to fit a new system," Ms Sandland says.
"I was a victim of crime, and did not wittingly hand over my car keys. I told Provident I did not know that I could, or should, have changed the locks, but the call centre told me it was 'common knowledge'.
"A colleague said that when she had her car keys stolen in a house burglary, her insurance company told her not to bother changing the car locks as they would pay up if the car was stolen," she adds.
But our arguments, and the FOS rulings, prompted Provident to look again. It still maintains she should have read policy section 12 to take "all reasonable steps to protect the car from loss or damage".
"Both the keys and documents that would identify the vehicle and its normal location had been stolen. In our view, by taking no action to replace the vehicle locks and by leaving the car parked outside the home address, there was a failure to protect the vehicle from this loss," the insurer said.
It adds it would have paid for new locks if the driver paid the first £100. But Provident accepts she did not act "recklessly" - a vital concession. The ombudsman says: "Firms may try to reject claims on the basis that policyholders were in breach of the policy condition requiring 'reasonable care'. But to establish this, firms need to show that the policyholders were 'reckless' - in other words, that they recognised the risk but deliberately 'courted' it."
The car has since been recovered but is damaged beyond economic repair.
Provident has agreed to settle any claim in full and, as a gesture of goodwill, it will waive the £100 policy excess.
What will drive the ruling on claims?
Most motor policies will not pay out for theft or attempted theft if the keys are left in - or on - the vehicle. But interpreting "leave" can be contentious.
The ombudsman needs to establish if the vehicle was 'left unattended'. If so, was the driver near enough to see the car and prevent the theft?
The location of the incident is important. The ombudsman says: "This is arguably more so than the physical distance between the driver and the car. After all, what is reasonable in one's own driveway may be unreasonable in public areas where crime of this sort is prevalent, such as petrol stations, or recycling units."
A driver standing next to their car may be deterrent even if the driver is not physically able to prevent a theft. The Court of Appeal recognised this, telling insurers to pay when a thief makes a move while the driver takes something out of the boot or attends to a child in the back.
Another example is policyholders who have turned their back on the car while closing the garage door. But those who go indoors to fetch something are likely to fail in a claim.
Insurers who rely on a "reckless" clause can often be forced to pay out. The om budsman says. "People 'court' risk if they either take no measures at all, or take measures that they know will not be adequate to avert the risk.
"This is the test of 'recklessness' as set out in the leading legal case. But most people who leave keys in the car simply fail to recognise the risk and/or take no precautions whatsoever.
"It is very difficult in these circumstances for firms to show that the policyholders were reckless. If the policyholders had been aware of the risk, they would probably not have left the keys unattended in the first place."
Ombudsman case studies show how the rules can work.
· Mr A parked his car opposite a letterbox and posted a letter, leaving the key in the ignition. While he was crossing the road to reach the letterbox, someone stole his car. The insurer used a "keys in car" clause to reject the claim. But the firm had not highlighted the clause. Nor had he acted "recklessly". So he was paid.
· Mr H went to the council dump. While he was disposing of an old carpet, someone stole his car. He had left the keys in the ignition. The ombudsman sided with the insurer as Mr H had walked away from the car.
