05 May 2022

Much to the relief of the insurance industry in the UK, the Motor Vehicles Compulsory Insurance Act 2022 (“the 2022 Act”) has now been passed and will come into force towards the end of June 2022.

The legislation, introduced as a Private Members’ Bill by Peter Bone MP, seeks to address the uncertainties and gaps in the law relating to compulsory motor insurance in the UK following the European Court of Justice’s decision in Vnuk v Zavarovalnica Trigalev (C-162/13).

As is now well known, Mr Vnuk was a farm worker who was knocked off a ladder in a farmyard by a reversing tractor and trailer to his injury. He was unsuccessful in the Slovenian Courts, however, his case was referred to the European Court of Justice by the Slovenian Supreme Court. In brief, the decision centred around the correct interpretation of Article 3 (1) of the Motor Insurance Directive. The consequence of the ECJ decision was that that compulsory insurance legislation in the EU member states would need to be amended to cover use of a wider range of vehicle types on private land, as well as on public roads.

This left the Road Traffic Act 1988 in the UK in need of an amendment to comply with Vnuk. Given that UK law only mandated insurance for roads and other public places, it had a narrower definition of the categories of vehicles that needed insurance than envisaged by Vnuk. It also left the UK Government and the Motor Insurers Bureau exposed to claims for a failure to implement EU law. 

Standing the judgement Vnuk, together with the High Court’s decision in RoadPeace v Secretary of State for Transport and MIB [2017] EWHC 2725 (Admin) (which confirmed that UK insurance legislation was not compliant with EU law), Brexit and the recent 2022 Act, the insurance industry was understandably concerned given the potential costs implications arising from Vnuk.

However, concerns have been allayed by the introduction of the 2022 Act. This Act inserts Section 156A into the Road Traffic Act 1988 which confirms that any retained EU case law such as Vnuk shall cease to have effect in the UK.

The result of the introduction of the 2022 Act is that the UK has taken a significant departure from the EU position on the regulation of compulsory insurance. Whereas the EU has taken steps to codify Vnuk through an amendment to the Motor Insurance Directive requiring member states to legislate for compulsory insurance for accidents on private land, this will not be the case in the UK. As it shall soon stand, the requirement remains only for motor vehicles to be insured for use on roads or public places unless a specific policy risk requires this to be extended. 

For more information on this topic please contact:

Angus Gillies, Associate: agi@bto.co.uk / 0141 221 8012