Consumers in the UK could soon be forced to insure every motor vehicle they own, regardless of whether it is used on a public road or not, following a recent ruling by the European Court of Justice (ECJ).
The ‘Vnuk ruling’, which came out of the Vnuk v Zavarovalnica Trigla trial, has caused a splash both in the insurance industry and in UK politics in recent months by suggesting sweeping changes to current insurance regulations.
If enacted in full in the UK, the ruling means anything from mobility scooters to ride-on lawnmowers would need at least third party liability cover by law.
The trial centered on Mr Vnuk, a Slovenian man who made a claim for compensation when injured by a tractor at work on private land in August 2007. When a court denied his claim on the grounds that the tractor was not being used as transport at the time, the case was referred to the ECJ, which has since ruled to ensure that any victim of any motoring injury is fully compensated, no matter the type of vehicle or its use.
Though not yet enforced, the ruling could mean that insurance would be mandatory for any motor vehicle being used on private land. The ECJ has broadly classified any motor vehicle as a machine which travels on land powered by an engine, and ‘used’ as being any use consistent with its normal function – so farm work for tractors in Mr Vnuk’s case.
It might be hard to see through the courtroom jargon to understand what this all means, but the suggestion is simply that anything motorised should be insured, regardless of its use. Such a change could potentially bring a raft of new vehicles into the insurance market, including golf carts, mobility scooters, go-karts, ride-on lawnmowers, farming equipment, track cars and many more.
Are Changes To Your Insurance Likely?
At the moment it’s difficult to say with any certainty what effect such changes would have on the average British motorist. Even once the directive comes into force, it would still likely take an amendment to the Road Traffic Act 1988 here in the UK before any new laws could be made, according to experts, meaning any changes are many months, if not years, away.
Perhaps unsurprisingly, it’s British policymakers and politicians who are most vocal about the directive, with support and outrage split along typical party and policy lines. Some of the loudest dissent has come from anti-EU politicians, with spokespeople from both UKIP and Get Britain Out suggesting in the press that the legislation is another example of the EU needlessly meddling in British legal affairs, and that a change simply isn’t needed.
Those on the pro-legislation side are keen to point out, however, that no final decision has been made, and that there are months of consultation to come between government and insurance bodies before that ever happens, during which time the implications could change significantly.
Another key point from the pro-EU camp is that the ECJ has said member states would most likely be able to opt-out certain categories of vehicle from the changes – potentially meaning the ruling will make no difference at all to current regulations for many of us.
How Does This Affect You?
While it’s hard to know for sure what the impact will be at this early stage, the best-case scenario for most of us, cost-wise at least, will be if all non-road going vehicles are exempted from the new rules, or if the costs are borne by another body.
It has been suggested, as reported in the DWF insurance blog, that the Motor Insurer’s Bureau (MIB), which currently compensates victims of uninsured vehicles in the UK with funds levied from insurers, could settle cases such as Mr Vnuk’s in the future.
Increasing the scope of the MIB could have a knock-on effect for customers’ premiums however, with experts from both the MIB and the Association of British Insurers warning that customers could end up bearing the brunt of the increased levy on insurers needed to pay out additional claims.
At the other end of the scale, costs for consumers could rise dramatically if changes are made to the law without any vehicles being exempted. While changes will be minimal for drivers who only own an already insured car used on the road, owners of other equipment face taking out individual policies for each ‘vehicle’ they own.
Although at present some home insurance policies include cover for equipment such as lawnmowers and mobility scooters, they often don’t or can’t provide the third-party liability insurance needed for use as a motor vehicle.
Companies not licensed to sell motor insurance would be forced to remove their cover for certain items that were recategorised as motor vehicles, something which might potentially pushing consumers to seek out motor policies for each vehicle they own.
In addition to adding new insurance needs for some vehicles, the Vnuk ruling could bring about the end of SORNed vehicles in the UK, as well as having implications for British motorsport. Currently many track cars will be insured for use only on the track, if at all, but new rules could mean everything from track cars, banger racers and even F1 cars would need insuring before they can be driven anywhere – something that would inevitably come with a hefty price tag.
With a lot at stake for British motorists and the insurance industry at large, all eyes will be on the ECJ, MIB and the government to see what steps will be taken. We’ll be sure to track any developments through the months of political wrangling to come, and keep you informed of any changes when they happen.