Will Motor Sport be Affected by the Upcoming Motor Insurance Review?
A recent EU ruling has sparked a Motor Insurance Review by the UK Government. A real game changer for motor insurance, we take a look at the potential impact on the motor sport industry.
The UK Motor Sport industry has gone from strength to strength over the years, currently adding in excess of £10 billion to the UK economy each year and directly employing 60,000 people in over 9,000 businesses. The UK Government is keen to support this, and further boost the industry but with the changes needed to the motor insurance laws the industry could still take a hit.
Currently there is no compulsory insurance for vehicles used on the track. Organisers and governing bodies such may provide public liability cover or personal accident insurance but this left to their discretion. The UK Road Traffic Act 1988 (Sections 143 and 145) states that third party cover is required by law for the “use of a motor vehicle on a road or other public place” and that a ‘motor vehicle’ is defined as a “mechanically propelled vehicle intended or adapted for use on the roads”. As motor sport vehicles tend to fall outside of these categories, insurance hasn’t been required.
Vnuk changed it all
After the EU ruling in 2014 which resulted in the Vnuk Judgment, the EU and UK Government are reviewing potential changes to the motor insurance laws. The aim being to make it easier for victims of a motor accident to claim compensation on private land. As no insurance is currently required for motor vehicles being used on private land, victims have struggled to make claims for damages or injury as there is usually no insurer to claim against. Mr Vnuk made such a claim in 2007, and after going to the court of appeals and being dismissed twice his case was sent the European Court Of Justice. They ruled in his favour.
Why does this affect the UK?
This was a game changer for motor insurance. The UK and other EU member states and interpreted the Motor Insurance Directive as meaning motor vehicles for road use needed insurance, when in fact it appears to be a much broader term.
The Motor Insurance Directive (MID) contains the motor insurance guidelines set out by the EU. As a member state, the UK must incorporate this into our national law. Which is what had been done with the 1988 Road Traffic Act and in turn our motor insurance laws.
Despite voting to leave the EU we are still currently a member so must abide by the changes made (or new interpretation) to the MID. Even after leaving the EU it is likely changes will still be made as the Vnuk Judgement highlighted a discrepancy in our motor insurance laws.
The UK Government will be reviewing the motor insurance laws in line with the MID, and have asked the public to give their opinion. You can complete the Government survey online here, the survey closes March 2017.
Will this affect the Motor Sport Industry?
It looks as though there are two options for the changes to the motor insurance laws, Comprehensive or Amended Directive which could have an impact on the Motor Sport Industry:
Option 1: Comprehensive
This option would mean changing our laws to better meet the current MID. A Comprehensive option would mean that a motor vehicle which is used in its normal way and intended function will require at least third party insurance by law. The big change here is that the way a vehicle is used will determine whether or not it needs insurance. Not where the vehicle is used, so third party cover will be need even on private land.
This would mean that all motor sport vehicles would need at least third party cover. The key issue with this option is whether these motor sport vehicles are even insurable. Many underwriters would refuse to even cover these vehicles as the risks and claims for personal injury are so high.
If underwriters do take on the risks, the costs associated with insuring motor sport vehicles could be the end of amateur motor sport organisations and events.
Option 2: Amended Directive
This would involve the MID being amended, and in turn our Road Traffic Act and motor insurance laws. The Amended Directive would mean that all motor vehicles would need third party cover if being used in traffic. ‘In traffic’ means the vehicle is used for ‘transport of persons or goods whether stationary or in motion’. This amendment would also include use on private land, but only if there is public access.
As motor sport vehicles are usually kept and used in areas which are off limits to the public, the industry shouldn’t be too affected by the changes.
Have your say!
As we mentioned, the UK Government are reviewing both options and have opened a public survey calling for your opinions. You can complete the survey here, and you’ve got until the end of March 2017 to get your responses in. The survey is aimed at officials and the public so some questions may not be relevant to you, you can just skip any which you don’t feel apply.
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