If you do not own the car and were not driving there is no way your insurers should pay out especially as the driver using the car at the time of the accident would not have been insurred on your policy (unless you were insurred as "any driver").

Time to speak to your insurers and make them aware of the facts.

i have many policies running and dont track them very well

Or are you perhaps holding back some information from us? How many peole have "many policies" running and can afford the luxury of not keeping track of them.

Dacouch is right. Section 148 of the Road Traffic Act 1988 makes the insurer liable even if vehicle is being driven outwith terms of policy.

There's another thread from a couple of weeks ago with same conundrum but from a different perspective.

it just does not seem right though. If the car is no longer mine then surely as having sold it i am legally devoid of any further liability for it?

A policy insures the vehicle, not the individual, and sets out who may drive it in what circumstances. If the policy is still running, that situation persists. If you want cover to cease, you should arrange it.

You can explore all you want the facts have been put before you the car is still covered because you forgot to cancel the policy its quite simple really it may not be fair but it is fact,a few people have fallen foul of this before and it has cost them dearly and have struggled to recover the money from the actual offender.

Unfortunately it's not an arguable position due to the Road Traffic Act which is statute law.

If you look on any (Motor) Certificate of Insurance it states in bold letters "Notice to third parties, nothing contained on this certificate may limit your ability to make a claim" This is due to the existance of the RTA and the requirements it places on Insurers authourised to provide motor insurance.

The relevant part of the Road Traffic Act is thus

"151

Duty of insurers or persons giving security to satisfy judgment against persons insured or secured against third-party risks

1) This section applies where, after a certificate of insurance or certificate of security has been delivered under section 147 of this Act to the person by whom a policy has been effected or to whom a security has been given, a judgment to which this subsection applies is obtained.

2) Subsection (1) above applies to judgments relating to a liability with respect to any matter where liability with respect to that matter is required to be covered by a policy of insurance under section 145 of this Act and either—

a) it is a liability covered by the terms of the policy or security to which the certificate relates, and the judgment is obtained against any person who is insured by the policy or whose liability is covered by the security, as the case may be, or

b) it is a liability, other than an excluded liability, which would be so covered if the policy insured all persons or, as the case may be, the security covered the liability of all persons, and the judgment is obtained against any person other than one who is insured by the policy or, as the case may be, whose liability is covered by the security."

www.legislation.gov.uk/ukpga/1988/52/section/151

The relevant section is b) which in laymans terms means that the Insurance covers any person for third party risks providing a judgement is obtained against them. In reality a judgement is not needed so what happens in practice is "The driver is identified" is substituted for "judgement is obtained".

So what the RTA does it means that the Insurer of the car is liable for claims say if you lend your car (Or if he borrows it without permission) to your son who is not a named driver on your policy providing he's identified eg arrested or the other party obtains his details etc.

The same applies if you sell your car and do not cancel your insurance and the new owners has an accident but has not insured the car. If they're identified then the seller's Insurers are liable.

There's a reason it's called a Certificate of Insurance, it's because it's a legal document that complies with the RTA and is an agreement by the issuers of that Certificate that they will abide by their statutory requirements of the RTA.

Insurers do not like paying claims due to this part of the policy and will then seek to recover their outlay from their policy holder. The policy (Which is in effect a contract on both parties) agrees the policy holder will reimberse the Insurers for sums they would not have had to pay out had it not been for their statutory requirement to under the RTA.

If the claim is from the Highways agency, |'m guessing it's for an amount in te reason of £5k of more.

Getting professional legal advice would be prudent, if you seek advice look for someone who specialises in vehicles so they understand the Road Traffic Act

The alternative to cancelling is either to transfer it to your replacement car or some Insurers allow you to suspend cover.

All the time there's a valid Certificate in place eg not cancelled etc then the Insurers are liable under this section of the RTA.

The reasons for this section of legislation are to protect innocent third parties, thankfully the OP's position is relatively rare. I've seen this situation in my professional career twice.