On 13 August 2015 it will be exactly eight years since a tractor knocked over the ladder on which Damijan Vnuk was standing while loading hay into the upper floor of a barn in rural Slovenia. He sued the tractor driver for compensation for his injuries. Eight years on, the ramifications of his claim are still shaking up insurance laws across the EU.
Last September, the European Court of Justice held that this sort of claim must come within the compulsory EU motor insurance directives. Earlier articles have already pointed out that the decision means that a wide range of vehicles and incidents will need to be insured under ‘motor’, rather than any other type of insurance policy. The UK will have to change its law on compulsory motor insurance. We believe that the Department for Transport will start to consult about the necessary changes before the end of 2015.
When the changes are made, possibly by the second half of 2016, insurance cover for injuries caused by vehicles not on roads or public places will need to be unlimited – public liability cover of even £10m for use of, say, a quad bike on a farm is unlikely to meet the legal requirement. Failing to arrange adequate cover will be a criminal offence.
Taking a wide view of the European court’s decision, I do think it is sensible and balanced in aiming to make sure that EU citizens injured by fairly conventional motor vehicles are properly protected by adequate insurance arrangements. But following that through and mandating all EU countries’ laws have to provide unlimited insurance funds for accidents caused by motability scooters, golf buggies and the like seems quite a far step. Equally, the idea that competitors in any sort of motor sport – drivers’ clubs’ weekend hill climbs and Formula 1 alike – should carry unlimited liability for injuries caused during competition would seem to stretch the rationale of the decision to breaking point.
The UK joined the EU around forty years ago, in 1973. Legislation providing for compulsory insurance for harm caused by motor vehicles had been enacted in the UK a further forty years before that, in the Road Traffic Act of 1930. So the aims of the ECJ in Vnuk are not at all foreign to the UK: this country had long ago recognised the need to provide for proper compensation to injured road users.
What makes our response to Vnuk complicated is the clash between compliance, pragmatism and politics. The Government is obliged to comply and to change motor insurance law because of the case. If it doesn’t, anyone injured in an accident like Vnuk’s could sue the UK Government if insurance cover was inadequate. And the Commission could sanction the UK for not meeting its EU treaty obligations. But shouldn’t pragmatism and common sense prevail? Don’t race tracks, factories, construction sites, farms and the like present completely different risks to the public than the ordinary traffic of private cars and commercial vehicles on roads and other public places?
There are no easy answers here. A legislative response to Vnuk is needed, but discussion of the right thing to do will inevitably be polluted by the troubled nature of the UK’s relationship with the EU as a whole. Predictably, the UK’s tabloid press has described the decision as “bonkers” and “insane”. It is neither. Instead, it should properly be seen as an incremental interpretation of the scope of compulsory insurance; a societal necessity recognised in the UK long before we joined the EU. What is crazy is the consequence that an F1 driver should be insured in the same way as a learner driver in a Ford Ka.
We think the Government will be looking for practical answers to the Vnuk problem rather than for more hackneyed anti-EU polemic. The consultation which is expected start later in the year should be regarded as a great opportunity for insurers and other stakeholders to put forward constructive solutions. It’s about time to get your racing crash helmets off and put your thinking caps on.
Written by Alistair Kinley, director of policy & government affairs