ABI urges EU Commission to clarify motor insurance status of private land vehicles in the UK

The ABI has urged the EU Commission to clarify that compulsory motor insurance only applies to vehicles when in traffic and not those used on private land.

Along with the British Insurance Brokers Association, Motor Insurers’ Bureau, International Underwriting Association, Lloyds Market Association and Lloyd’s, the association is demanding clarification following the controversial Vnuk case in 2014. In Vnuk, the European Court of Justice (ECJ) ruled that compensation for injuries suffered by a Slovenian farm worker, Damijan Vnuk, by a tractor while on private land should have been covered by compulsory motor insurance.

The Commission is currently using a public consultation to gather feedback on the issue. It intends to look into the role and functioning of motor guarantee funds, especially in cases where the insurer of the liable party becomes insolvent. It is also seeking to increase the role of the insurance claims history of individuals when moving between EU Member States, which is used to calculate no-claims discounts.

The ABI has warned that if the Commission fails to act, then the UK government will need to change domestic law and extend the scope of compulsory motor insurance for the time the UK remains in the EU and during any exit transition period.

The ABI has said that the prospect of owners of off-road vehicles needing insurance is unnecessary, unworkable and unfair, leading to significant disruption and additional costs.

It has said that the ECJ’s ruling is unnecessary as if the accident had happened in the UK then it would have been covered through employers’ liability insurance or public liability insurance. It has also said that implementation would involve a costly taxpayer-funded enforcement and compliance regime, which would be virtually impossible to enforce. It added that recreational motorsport participants would be forced to pay for cover they have never needed before. As a result, the cost of insurance could make it difficult for some events to continue as insurers have no reliable past data to assess the risk and calculate premiums.

Ben Howarth, senior policy adviser, Motor and Liability, Association of British Insurers, said:

“We recognise that victims of accidents on private land should be entitled to compensation, but making insurance compulsory for off-road vehicle users is unnecessary, unworkable and unfair.

“There is no evidence that this extension is needed in the UK. And it could prove the next lucrative hunting ground for claims management companies, encouraging claims that end up being paid for by all motorists through higher premiums.

“The European Commission can easily resolve this, by implementing its own proposal to simply specify that the Motor Insurance Directive only applies to vehicles in traffic. It needs to end the uncertainty by doing this now.”

A Commission official said: “The Commission has launched work to collect views on how the rules governing this area function.  A public consultation is currently gathering feedback on the scope of the rules and specifically whether protection provided under the Motor Insurance Directive should include liability for accidents both on public roads and private property.  The consultation is open until 20 October 2017.

“We welcome the feedback of all stakeholders, but while the consultation is ongoing we can’t comment on individual stakeholders’ views or on our future course of action.”

Mark Dugdale