UK Road Traffic Act Spells Change for Motor Insurance Requirements
An accident involving a worker on a farm in Slovenia is about to bring about major change to the UK’s Road Traffic Act (RTA) and motor insurance. In 2007 Damijan Vnuk, a farmworker, was knocked off a ladder by a reversing trailer attached to a tractor on a farm in Slovenia.
The fact that the claimant was a) working, b) on private land, and c) that the incident was caused by a tractor that was being used as a machine all point to this being a workplace accident. Indeed, the case was successfully defended by the motor insurers a number of times as an Employers’ Liability case. That is, until it reached the European Court of Justice (ECJ) - the EU’s highest court.
In a judgement issued in September 2014, the ECJ found that the relevant motor insurer had a duty to insure in the case of Vnuk. The ECJ based its decision on Article 3 of Directive 2009/103/EC, which relates to civil liability and motor insurance.1 According to Article 3, “Each Member State must take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance”.2
The Directive defines a vehicle as “any motor vehicle intended for travel on land and propelled by mechanical power, but not running on rails, and any trailer, whether or not coupled”.3 The ECJ clarified this definition of “vehicle” in light of Vnuk: the concept of “use of vehicles…covers any use” of a vehicle that “is consistent with the normal function of that vehicle”.
Given the ECJ ruled against the motor insurers, we can make a number of assumptions with regards to this statement.
The obvious ramification of this statement is that, as long as the vehicle is being used consistent with its “normal function”, it is insured under a motor policy. This could include vehicles being used as machines, and not just as a means of transport. Currently the UK RTA leaves the “use” of a vehicle, undefined. Insurers tend to define use via their individual policy wordings.
As to what “normal function” actually means, this is also left undefined. “Normal function” could have a broad range of meanings, especially when considering the definition of motor vehicle, as highlighted by this case.
The Directives define motor vehicles as “any motor vehicle intended for travel on land and propelled by mechanical power”. This compares to the UK RTA that defines vehicle as “A mechanically propelled vehicle intended or adapted for use on roads”. It appears that the UK RTA should extend to any vehicle that is used on land, not just those used on roads. This could now include scramblers, snowmobiles, airport tugs, and any manner of other machines not designed specifically for road use.
To complicate matters further, the Vnuk judgment suggests the UK RTA misapplies “where” motor insurance applies. Currently the UK RTA applies to “a road or other public place”. “Public place” has been clarified further by case law and tends to extend to those places to which the public at large are admitted. Vnuk, however, was injured on truly private land - a farm.
There are two ways to interpret this:
- “Public place” should really read “anywhere (on land)”.
- Location applies to function. The ECJ rationale relied on the meaning of “normal function” of a vehicle. Ostensibly this referred to how a vehicle is used and whether that use needs to be insured. However, given that tractors normally function on farms, the intent could well have been to link “place” with “function”. As such, where the RTA/Compulsory insurance applies could vary from vehicle to vehicle.
However we decipher the ECJ’s ruling, further guidance is expected on the subject from the Department of Trade and its European equivalents. Clearly, current understanding of compulsory motor insurance requirements is flawed. Both standalone motor insurers - and general liability insurers writing global programs with excess and contingent motor covers - may have exposures on their books that they were previously not contemplating. Further adjustment may be required of cover that is based on trade and occupation.
- Judgement of the European Court of Justice (Third Chamber), 4 September 2014.