How UK motor insurance is set to change
In 2007, a Slovenian farm worker sought compensation for damages, after he was knocked off his ladder by a trailer that was being reversed by a tractor. The Slovenian Court of Appeal turned-down his claim for damages, made against the tractor’s insurer. One of the reasons cited was that the tractor was being used on private land and, therefore, does not require insurance, because it was being used neither on the road, nor in a public space.
So, why could this story affect your insurance? After the case escalated, the European Court of Justice ruled in the claimant’s favour, meaning that the tractor’s insurer had to pay compensation for an incident that occurred on private land, instead of the tractor’s owner. The ‘Vnuk Judgement’, could, therefore, see vehicles in Europe requiring insurance, even if they are not used on either the highway, or in public places, which gives an easier route for a claim to be made against an insurer, rather than against an individual.
It could also mean that the British definition of a ‘Motor Vehicle’ has to be extended from the existing definition (a ‘mechanically propelled vehicle intended, or adapted for use on roads’) to ‘any motor vehicle intended for travel on land’. This could bring off-road vehicles into the scope of being a “motor vehicle” that includes Segways, mobility scooters, golf buggies and even electrically-powered children’s toys. It is also possible that a motor car that is off the road (and declared as SORN) would require insurance as well.
It is thought, however, that insurance premiums will rise overall, not only because of an increase in claims but also due to the expected rise in fraud.
What is the UK Government proposing?
The situation is not scaremongering; the ‘Vnuk Judgement’ will affect the UK insurance industry. The question is ‘to what extent?’. Last month, the UK government considered the judgement (the full document can be downloaded here). In essence, two options are being considered:
1. Comprehensive Option:
All motor vehicles that are used in a way that is consistent with its normal function will require third-party insurance. This, for example, would mean that a motor sports vehicle would need insurance, if competing on a private race track. While this is required on a professional level anyway, it would also be a requirement for ‘grass roots’ motorsport, such as banger racing, or karting.
2. Amended Directive
This is preferred by UK Government, in that third party cover is required when a motor vehicle is used when transporting goods, or persons not on private land but only on land over which the public has access.
Both options, however, would see the ‘motor vehicle’ definition being extended, as mentioned previously.
The Department of Transport is looking to the public for its opinion on potential changes, which closes at the end of March and can be accessed here.