Comprehensive and Amended Directive | What’s the difference?

What’s the difference between the Comprehensive and Amended Directive options?

After a recent EU ruling, the UK Government is reviewing the current motor insurance laws. There are two main options being considered in the Motor Insurance Review, the Comprehensive and Amended Directive option. We take a look at what those options could mean for UK insurance.

For more information about the Motor Insurance Review read our summary.

Current Motor Insurance Law

As a member state of the European Union, the UK’s motor insurance laws must comply with the Motor Insurance Directive (MID) outlined by the EU. The recent Vnuk Judgement has shown that the MID has some flaws and is open to interpretation. The EU are making changes to the MID which will mean the UK Government must also review our motor insurance laws.

Even with our imminent exit from the EU, the UK Government still feel that because of the Vnuk Judgement our laws need updating.

The aim of this Motor Insurance Review is to improve the way victims claim for compensation in a wider range of circumstances. Currently if there is a motor accident on private land, a victim would need go to court and appeal for compensation against the motor insurance company. If that vehicle had been insured then the victim could just claim against that insurer as we do with road accidents. Or if the vehicle should have been insured, but wasn’t then the victim could claim against the Motor Insurance Bureau (MIB).

The requirement for compulsory third party motor insurance is outlined in the Road Traffic Act 1988. The law requires third party cover to be in place when a motor vehicles is used on a road or other public place. 

  • ‘Motor vehicle’ refers to a ‘mechanically propelled vehicle intended of adapted for use on roads. So cars, vans, lorries, motorcycles etc.
  • ‘Used’ refers a vehicle either stationary or in motion, under control of the driver.
  • ‘Road or other public place’ would mean public highways or any other area where the public has access to including supermarket car parks.

So, currently in the UK motor vehicles being used on roads or in public areas require at minimum of third party cover. 

Comprehensive and Amended Directive Options

There are two main options the UK Government is considering as part of the Motor Insurance Review: the Comprehensive and Amended Directive option. What’s the difference between the two and how could they impact UK motor insurance?

Comprehensive Option

This is the option being considered by the EU, whilst we remain a member state of the European Union the UK must comply with this option. The Comprehensive option would require all motor vehicles being used for their intended purpose to have at least third party cover. Regardless of whether this is just on private land or not.

Key Changes

1: ‘all motor vehicles’

Currently only vehicles intended for use on the road need insurance. If the Government chooses the Comprehensive option then any motor vehicle being used for it’s intended purpose would need at least third party cover. This would mean that the definition of motor vehicles is broadened, to include ‘newly in scope vehicles’.

These ‘newly in scope vehicles’ could include:
  • Segways
  • Mobility Scooters
  • Golf buggies
  • Construction vehicles
  • Motor sport vehicles
  • SORN vehicles
2: Location

The Comprehensive option would require all motor vehicles to have at least third party cover no matter where they are used. This would mean that even when a vehicle is used purely on private land, the vehicle owner would need to take out an insurance policy. This again would not only affect the motor sport industry but also SORN vehicles.

3: Route to compensation

The aim of the Motor Insurance Review is to improve victims’ route to compensation, the below table shows how the Comprehensive option would offer this:

ScenarioThird party cover legally required?Does the vehicle have third part cover?Who deals with the claim?Does MIB fund claims as a last resort?Is this different to current motor insurance laws?
Car, accident is on public roadYesYesInsurersYes, if cover inadequate to meet claimNo, existing liability
Car, accident is on public roadYesNo (Driver is uninsured)MIBYes, compulsory insurance was a legal requirementNo, existing liability
Car, accident is on public roadYesUnknown ('hit and run')MIBYes, compulsory insurance was a legal requirementNo, existing liability
Car, accident is on private landYesYesInsurersYes, if cover inadequate to meet claimYes, new liability
Car, accident is on private landYesNo (Driver is uninsured)MIBYes, compulsory insurance was a legal requirementYes, new liability
'Newly in scope vehicle' Accident is on land which the public can accessYesYesInsurersYes, if cover inadequate to meet claimYes, new liability
'Newly in scope vehicle' Accident is on private landYesYesInsurersYes, if cover inadequate to meet claimYes, new liability
'Newly in scope vehicle' Accident is on land which the public can accessYesUninsured Driver or Unknown DriverMIBYes, compulsory insurance was a legal requirementYes, new liability
'Newly in scope vehicle' Accident is on private landYesUninsured Driver or Unknown DriverMIBYes, compulsory insurance was a legal requirementYes, new liability

Potential Impact

motorsport industry

Currently no insurance is required for motor sport vehicles. If the Comprehensive option is in force then potentially motor sport vehicles would need at least third party insurance. This is because they are used for motor sport, which is their intended use. The impact this could potentially have on the motor sport industry is huge. Larger organisations may be able to stomach the costs, but this could be the end of smaller groups and amateur events. That is, if underwriters are willing to even cover the risk these vehicles pose. Many motor sport vehicles could potentially be uninsurable, because of the high number of accidents they are involved in. Read more about the potential impact on the motor sport industry here.

Claims

If all motor vehicles need insuring then this additional cost will impact individuals and businesses who would not otherwise have needed to budget for motor insurance.

We could also see a increase in the number of claims made which would increase the administrative costs of both insurers and the MIB. This additional cost is likely to passed to the consumer which would mean an increase in insurance premiums.

As the Comprehensive option would require vehicles on private land to have insurance, it is likely that there would be an increase in claims. Unlike accidents on public areas where there would CCTV and witnessed to back up any claims,  it would be difficult to prove which claims are true and which are fraudulent on private land.

Enforcement

It’s unclear how this change to motor insurance law would be enforced. How will the Police know whether vehicles on private land are insured, if they are never used on the public road and so are never picked up by enforcement cameras?

If the an uninsured ‘newly in scope’ vehicle is found, then would the owner face the same penalties as uninsured drivers do currently? Say if a mobility scooter was found to be uninsured, should the owner receive the same penalty as the owner of an uninsured car?

Benefit

As is the aim of the Motor Insurance Review, the benefit of the Comprehensive option is that victims would have an easier route to compensation in a wider range of circumstances, including accidents on private land.

Amended Directive Option

This is the option favoured by the UK Government. The Amended Directive would mean that all motor vehicles would be required to have third party cover when used in traffic.

Key changes:

1: motor vehicle

This would mean any motor vehicle intended for travel on land. Like the Comprehensive option, the Amended Directive option broadens the definition of a motor vehicle to include newly in scope vehicles.

2: Used in traffic

Unlike the Comprehensive option which requires all motor vehicles have cover despite their location, the Amended Directive would mean that only vehicles intended to be used in traffic need third party cover. ‘Used in traffic’ is defined as a vehicle is being used for the transport of persons or goods. This would cover both roads, public areas and private land which the public has access to.

3: Route to compensation

The below table shows how the Amended Directive option will make it simpler for victims to claim compensation after an accident:

ScenarioThird party cover legally required?Does the vehicle have third part cover?Who deals with the claim?Does MIB fund claims as a last resort?Is this different to current motor insurance laws?
Car, accident is on public roadYesYesInsurersYes, if cover inadequate to meet claimNo, existing liability
Car, accident is on public roadYesNo (Driver is uninsured)MIBYes, compulsory insurance was a legal requirementNo, existing liability
Car, accident is on public roadYesUnknown ('hit and run')MIBYes, compulsory insurance was a legal requirementNo, existing liability
Car, accident is on private landNoYes, VoluntarilyInsurers - if the policy covers private landNo, compulsory insurance was not a legal requirementSame as now
Car, accident is on private landNoNoCompensation only available if a successful claim is bought against the driverNo, compulsory insurance was not a legal requirementSame as now
'Newly in scope vehicle' Accident is on land which the public can accessYesYesInsurersYes, if cover inadequate to meet claimYes, new liability
'Newly in scope vehicle' Accident is on private landNoYes, VoluntarilyInsurers - if the policy covers private landNo, compulsory insurance was not a legal requirementSame as now
'Newly in scope vehicle' Accident is on land which the public can accessYesUninsured Driver or Unknown DriverMIBYes, compulsory insurance was a legal requirementYes, new liability
'Newly in scope vehicle' Accident is on private landNoUninsured Driver or Unknown DriverMIBNo, compulsory insurance was not a legal requirementSame as now

Impact

Although the Amended Directive would be similar to the Comprehensive option, in that more people would need to take our insurance policies the impact to the UK is definitely lesser. Vehicles on private land would need third party cover would now need insurance, but only if the public has access. This would help to protect the motor sport industry and SORN vehicles.

Benefit

The Amended Directive option would provide an easier way for victims of a motor accident to claim compensation in a wider range of circumstances.

Key differences between the Comprehensive and Amended Directive options

The main difference between the Comprehensive and Amended Directive options are that the Amended Directive option would only require motor vehicles being used on land which the public have access to. Unlike the Comprehensive option insurance would not be compulsory on land which is purely private. The table below outlines the key differences between the two options:

Insurance Required?Current LawsComprehensive OptionAmended Directive Option
RoadYESYESYES
Public AreaYESYESYES
Private Land with no public accessNOYESNO
Private Land with public accessNOYESYES
Vehicle UseVehicles intended for use on road useVehicles being used for their intended purposeVehicles being used for their intended purpose on roads,
in public areas and on private land with public access

Have your say

The UK Government have opened a survey to the public for their opinions on the motor insurance review. The survey closes March 2017, to complete the survey click here. Find out more about the Motor Insurance Review here.

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