We wrap up the key points in our Motor Insurance Review Summary
You’ve got until March 2017 to have your say, but what is the Motor Insurance Review and why does it matter? For a full explanation, read on for our view on the Motor Insurance Review Summary.
The UK Government have opened a survey for the public to give their opinion on potential changes to motor insurance laws. The survey closes March 2017. The changes being discussed could have a huge impact on the UK insurance industry and the public. You can read the full article about the Motor Insurance Review here, or read on as we summarise what the Motor Insurance Review Summary could mean for you.
It’s well established that you don’t currently need third party insurance to use a vehicle on private land. In fact insurers won’t cover your vehicle unless you’re using it on roads or in public places.
Currently the MIB cover the cost of victims who are hit by an uninsured driver whilst on a road or in a public area. When a victim seeks compensation for an incident with a motor vehicle on private land they would need to bring a successful claim against the driver in court. This is because is it not required that you have insurance for a vehicle that is exclusively used on private land.
Seems pretty straight forward right? A recent EU ruling has shown that the current motor insurance laws need amending and it’s not quite so cut and dry.
The Game Changer
In 2007, a Slovenian farm worker, Mr Vnuk, was knocked off his ladder by the trailer of a tractor. When he went to claim compensation for damages, the claim was dismissed in the Slovenian court of appeals, twice.
You see, Mr Vnuk was claiming for damages against the insurance company who covered the tractor on a compulsory insurance policy. The issue was that the courts didn’t see that it was the duty of the insurer to cover the circumstances which led to the accident:
- The vehicle was on private land, current insurance laws don’t cover this;
- The use of the vehicle was disputed, insurance covered the tractor for use as a means of transport rather than a propulsion device (pushing a trailer, which caused the accident).
Rather than the unsuccessful claim being the end of it, the Slovenian court of appeals went to the European Court of Justice for their opinion. In 2014 they ruled in favour of Vnuk. This meant the insurer had to pay him compensation for an accident on private land by a tractor towing a trailer.
This ruling has sparked a review; perhaps the straightforward motor insurance laws weren’t so clear cut after all? It seems that they are open to interpretation and perhaps the UK legislation interpreted them incorrectly?
After the 2014 Vnuk Judgement, the UK Government feels that the current motor insurance laws need reviewing. With the aim being to make it easier for victims to claim compensation for accidents with a wider range of vehicles in a wider range of circumstances.
Currently the MIB cover the cost of victims who are hit by an uninsured driver whilst on a road or in a public area. When a victim seeks compensation for an incident with a motor vehicle on private land they would need to bring a successful claim against the driver in court. However, after the Vnuk Judgement, we could see vehicles needing insurance when on private land. If there is an incident on private land, victims have an easier way to claim, by simply going to the insurer of that vehicle.
There are two main options the Government are looking at.
Option 1: Comprehensive
The basic premise is that all motor vehicles being used in a way that is consistent with the normal function of the vehicle would be required by law to have third party insurance, even if just being used on private land. ‘Consistent with the normal function’ would mean it being used for its intended purpose, so a motor sport vehicle being used at motor sport events.
Option 2: Amended Directive
This would mean a change to the Road Traffic Act 1988, so a wider range of vehicles would need at least third party insurance on private land with public access. This is the choice favoured by the Government. This would see third part cover legally required when a motor vehicle is used in traffic. Traffic in this case means the transport of goods or persons whether stationary or moving.
Both option 1 and 2 would see the term motor vehicle extended, currently it refers to a ‘mechanically propelled vehicle intended or adapted for use on roads’ this could change to ‘any motor vehicle intended for travel on land’.
Despite the recent Brexit vote, we’re still currently part of the European Union which means we need to abide by EU guidelines as a member state. The EU is likely to go with the Comprehensive approach, which means the UK will still need to change the motor insurance laws on a temporary basis until we leave. Once we have left the UK will most likely revert to the Amended Directive option.
Whether we go with the Comprehensive approach or the Amended Directive, there is still going to be an impact to the UK insurance industry.
This is likely to affect your insurance premiums. This is because insurance is all about profiling risk and insurers having to cover the additional risk of driving on private land, and the potential claims could mean increase in insurance costs.
We could also see many individuals and businesses who wouldn’t previously have needed to budget for insurance now being legally required to have a policy.
The Motor Sport industry could also be affected under the Comprehensive approach, motor sport vehicles would need insurance. The issue is not only the cost to the Motor Sport industry, but also whether these vehicles are even insurable.
With the change in motor insurance laws, we could see an increase in insurance fraud. This raised the issue of enforcing these new motor insurance laws, and what sort of penalty system would be needed.
Both option 1 and 2 would see the term motor vehicle extended, currently it refers to a ‘mechanically propelled vehicle intended or adapted for use on roads’ this could change to ‘any motor vehicle intended for travel on land’. We could see the below vehicles needing at least third part cover, even for exclusive use on private land:
- Mobility Scooters
- Golf buggies
- Construction vehicles
- Motor sport vehicles
- SORN vehicles
Have your say
The Government is holding a survey, giving you the chance to have your say. The survey closes March 2017, and it’s not that straightforward so we will be putting together a Guide to the Motor Insurance Survey shortly. You can complete the survey here.
We hope our Motor Insurance Review Summary gave some insight into the potential changes. For a more detailed information on the Motor Insurance Review read A Game Changer For UK Motor Insurance
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