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Protecting Motor Premiums - Brexit, the EU and the Vnuk Judgement

One consequence of Brexit has been to enable Britain to get out of a rather sticky hole regarding a proposed costly extension to compulsory motor insurance.

The necessity for compulsory third party motor insurance for motor vehicles has been in place in the UK for many years and is covered by the Motor Insurance Directive (‘MID’) from the EU.

In the 2014 case of Vnuk, the European Court ruled on a query from Slovenia regarding the application of the MID in a case where a tractor and trailer hit and injured a farm worker on private land. The Court ruled that the incident was covered by the MID and the insured worker could claim on the motor policy, despite the accident taking place on private land.

As a result of the Vnuk decision, and whilst in the EU, our government had to review how the case applied to domestic law and in what circumstances motor vehicles must have compulsory insurance - should it now include cover for motor vehicles on private land? Among other things, this would have a big impact on the motor sport industry.

The problem extended further still because the definition of “motor vehicle” as enshrined in the Road Traffic Act (1998) is fairly wide:  “a mechanically propelled vehicle intended or adapted for use on the roads”. This definition would include vehicles that currently do not require compulsory insurance- such as golf buggies, mobility scooters, quad bikes and even ride-on mowers.

The government commissioned a report on the potential impact on the insurance industry and concluded that the extra insurance costs would have to be covered by an increase in motor premiums of about £50.00 per year.

The other issue for the UK was that a strict interpretation of Vnuk would mean all motorsports vehicles (ranging from a go-kart up to a F1 car) would require compulsory insurance. The projected cost to the motor sports industry was estimated at £458 million per year.

It is perhaps not surprising, therefore, that on 21 February 2021 the Government announced that the Vnuk judgment would not be followed and stated:

Had the EU law been implemented in Great Britain, it would have meant the insurance industry would have been liable for almost £2 billion in extra overall costs. These costs would likely have been passed onto their customers – British road-users.”

“Now we have left the EU, the measures no longer need to be implemented, helping road-users across the country steer clear of increased premiums – a clear win for motorists in Britain.

Ashfords partner, Flora Wood commented on the announcement:

“This brings to an end the concerns about a big rise in motor premiums due to Vnuk. However, if you own any type of “motor vehicle” which might cause an accident or injury, it would be prudent not to be exposed to a claim and to check that you have the right package of cover for all your vehicles – whether under your motor, business or home insurance.“

If you need advice in relation to a serious injury claim involving any type of vehicle whether on the highway or on private land please contact Flora Wood from our Personal Injury Team.

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