Government reverses course on extending compulsory motor insurance

Shapps: We have always disagreed with this over-the-top law

The government has scrapped plans to implement the Vnuk law, which would have extended compulsory insurance to a wide range of vehicles and onto their use on private land.

The Department for Transport said introducing the measures would have added an estimated £50 a year to motor insurance costs.

The 2014 European Court of Justice decision in Vnuk concerned a case of a tractor on private land in Slovenia that injured Damijan Vnuk by knocking him off a ladder.

It ruled that any vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled, fell within the definition of “vehicle” under European insurance law.

Further, compulsory insurance was required to cover any use of a vehicle that was consistent with its normal function – even if not on public roads.

This brought vehicles such as fork-lift trucks, golf buggies and quad bikes into the scope of compulsory insurance and went further than UK law, which was limited to vehicles on public roads.

The DfT ran a technical consultation in 2017 about how to change the law as a result of Vnuk. This closed in April 2017 and the department had not announced a way forward. But it has now confirmed that, as a result of Brexit, reform was no longer needed.

By extension, this should mean that the Motor Insurers Bureau (MIB) would not have to cover Vnuk claims.

The DfT stressed that, in addition to not having the extra cost, bypassing Vnuk would also protect the UK’s motorsports industry.

“The EU rules would have meant any motorsports collision involving vehicles from go-karting to F1 would have been treated as regular road traffic incidents requiring insurance. This could have decimated the industry due to the additional insurance costs of roughly £458m every single year.

“Scrapping the rules will save the industry from potential collapse and secure hundreds of thousands of jobs in the sector in the process.”

Transport secretary Grant Shapps said: “We have always disagreed with this over-the-top law that would only do one thing – hit the pockets of hard-working people up and down the country with an unnecessary hike in their car insurance. I am delighted to announce that we no longer need to implement it.

“Scrapping this rule would save the country billions of pounds and is part of a new and prosperous future for the UK outside the EU – a future in which we set our own rules and regulations.

“As well as the likely financial burden on British road-users, the Vnuk rules are considered unnecessary as there are already insurance packages available to Brits that cover certain risks on private land.”

Mark Shepherd, assistant director, head of general insurance, at the Association of British Insurers, said: “We welcome the government’s plan to scrap this unnecessary requirement. This should happen as quickly as possible.

“There would have been no easy way to monitor compliance and enforcement for those using their vehicles on private land. It would also have been difficult to establish the circumstances of any claim, so increasing the scope for fraud.”

Sam Elsby, president of the Association of Personal Injury Lawyers, said the decision ignored the needs of injured people.

“These vehicles can cause serious injuries, or worse, and their drivers must be insured to use them. Paying insurance premiums is both an incentive to drive safely, and a way to ensure injured people can receive proper compensation to help put their lives back on track.

“Just because someone is injured by an off-road vehicle does not mean they should not be entitled to the same compensation as someone injured on a public road.”

Dan Herman, a partner and head of the Leeds office of leading claimant firm Stewarts, tweeted: “This decision will likely result in a significant number of seriously injured people being uncompensated and the cost of caring for them and meeting their needs falling on the state rather than insurers.”

He noted that, while many claimant lawyers would be disappointed with the decision, Stewarts was the only claimant law firm to respond to the 2017 consultation, “as opposed to numerous defendant firms and insurers”.

In 2019, the Court of Appeal cited Vnuk in upholding a ruling that the MIB had to pay compensation to a man injured by an uninsured vehicle, even though it was on private land.

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