The morning of 13 August 2005 would have begun like any other day for Slovenian farm worker Damijan Vnuk. Yet, when a tractor and trailer knocked over the ladder that he was using to load hay onto the upper floor of a barn, a chain of events was set in motion that would change the face of motor insurance across the whole of the European Union (EU).
Vnuk sued for compensation for his injuries from the driver who had been reversing the tractor, and the result of the ensuing court case now has Europe-wide implications, with governments changing their laws to bring them into line with the judgment. Part of those changes will involve amending the Road Traffic Act by UK Parliament, with UK Government expected to launch a consultation on its proposed alterations within a matter of weeks.
A huge number of businesses operating across a vast array of sectors will be affected by the changes including retailers, manufacturers, leisure companies and hoteliers as well as local authorities, utilities, waste management companies, logistics companies, construction companies and the motorsport industry.
One of the reasons behind these major changes is that some of the accidents and risks that are currently covered under employers’ liability and public liability insurance policies are now extremely likely to have to come within the scope of compulsory motor insurance.
Unless the UK Government introduces exemptions, a raft of vehicles that were never previously covered by motor insurance will now need to be included within a policy. Bulldozers, diggers and forklift trucks could need to be covered, along with mobility scooters, motorised wheelchairs, quad-bikes and even floor cleaners.
Vnuk’s case went all the way to the European Court of Justice because the Slovenian courts had initially held that the tractor wasn’t being used for its main purpose – it was not being used as a means of transport but was instead being used to push a trailer into a barn. The European court ruled that the definition used in the EU Motor Insurance Directive – about “any use of a vehicle consistent with the normal function of that vehicle” – should apply in such situations.
That ruling means that the definition used in the current Road Traffic Act – which applies to “a mechanically propelled vehicle intended or adapted for use on roads” and leads to such a vehicle needing insurance on a “road or public place” – needs to be changed to bring all qualifying vehicles into the arena of motor insurance.
Insurers themselves could also face changes. If an insurance company wants to offer a policy covering risk under the Road Traffic Act then it will need to become a member of the Motor Insurers’ Bureau and pay a fee that allows the Bureau to cover the cost of claims that are caused by uninsured or untraceable drivers. At the moment, not all of the insurers that cover the risks posed by off-road and specialist vehicles are members of the Bureau.
What won’t change though are the fundamentals – companies and organisations will remain liable for their employees’ negligence, whether they’re driving on the road or off-road. Yet the insurance policies will be different, because motor insurance policies have to carry unlimited cover for personal injury claims, unlike employers’ liability or public liability insurance.
Motorsport is one area in which specific questions will be raised. Will the costs of regulation and compulsory insurance be a threat to grassroots motor racing? Additionally, could corporate hospitality, experience days or track days become uneconomic when the extra costs of additional insurance are factored into the equation?
Those framing the redefined laws will also have to be wary of the increased risk of insurance fraud if criminals file claims for accidents that have allegedly taken place on private land, away from public view.
Although eight years have passed since Vnuk was knocked off his ladder by a tractor and trailer, the pace of change over the next few months is expected to be brisk. Ministers are poised to consult over their proposed changes before the turn of the year, with the amendments to the Road Traffic Act predicted to be introduced to Westminster in the early months of 2016.
The consultation will give insurers and other stakeholders their chance to suggest workable solutions. In the meantime all businesses and public sector organisations that operate vehicles, whether it’s a tractor in Tomintoul, or a mobility scooter in Morningside, need to get ready for these changes as the events in that Slovenia barn continue to be felt throughout Europe.
Ian Leach
Partner
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