Petrol Clause (Motor Vehicle Exclusion)

Purpose

The petrol clause draws a clean line between general personal or commercial liability cover and the compulsory motor, aviation or watercraft liability insurance. It excludes the statutory liability of the owner, possessor, keeper or driver of a motor vehicle, aircraft or watercraft for damage caused by the use of that vehicle, since this exposure is systematically allocated to the specialised, legally mandated vehicle liability cover.

Effect and limits

A distinction is drawn between the small petrol clause in personal liability cover and the large petrol clause in general liability cover, which additionally captures persons provided or instructed by the policyholder. The key and frequently disputed question is the meaning of “use”: case law requires that a hazard characteristic of vehicle use itself has materialised, for example during refuelling or loading and unloading, whereas operational activity risks such as an incorrect delivery into a third party’s tank typically fall outside the clause and remain within general liability cover.

Negotiation and practice

The exclusion itself is barely negotiable, since it is essential to avoiding double insurance with motor liability cover. Room for negotiation exists mainly around the carve-back for slow-moving work machinery and vehicles used only on private premises, which some insurers include in personal or general liability cover for an additional premium.