The European Court of Justice’s (ECJ) decision in Damijan Vnuk v Zararovalnica Triglav has significant ramifications for the scope of compulsory motor insurance and other liability insurances in the UK. In Vnuk, the ECJ concluded that the legal obligation to insure motor vehicles, set out in the EU Motor Insurance Directives (MID), should be interpreted to extend to ‘any use of a vehicle consistent with the normal function of that vehicle’. The use of a vehicle is a wide concept and includes ‘any use’ and is no longer restricted in geographic scope such as by reference to ‘road‘, ‘other public place’, or ‘private land’.
This is a final judgment and is directly applicable in all EU member states. Consequently, the restrictions in the UK’s Road Traffic Act 1988 (RTA) of the definition of a motor vehicle to ‘a mechanically propelled vehicle intended or adapted for use on roads’ and, particularly, of compulsory insurance to the use of motor vehicles on a ‘road or other public place’ are now seemingly contrary to EU law as understood after Vnuk. This change has the potential to bring a range of off-road vehicles and situations within the scope of the UK’s compulsory motor insurance regime for the first time.
As things stand, nothing changes in terms of UK law until the RTA has been amended, very likely in terms of its definition of ‘vehicle’ and ‘use’. Any amendment to the RTA will in turn result in amendment to the MIB agreements. However, pending any change, the Government is potentially at risk of Francovich claims – damages paid by an EU member state to one of its citizens – for failing to implement the Directive properly. Such claims would arise from incidents which now fall within Vnuk but are outside current UK motor insurance arrangements.
BLM has been facilitating discussions with the Department for Transport (DfT), Motor Insurers’ Bureau, Association of British Insurers, British Insurance Brokers’ Association, insurers and brokers in anticipation of the Government consultation that is expected in the coming months. At present the DfT is undertaking an impact assessment and requesting information as to insurers’ claims experiences from ‘vehicles’ and ‘use’ that would not at present fall within the compulsory insurance obligation of the RTA but will fall within the Vnuk interpretation.