Compulsory Insurance: All Change at Home and Abroad

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Compulsory Insurance: All Change at Home and Abroad

Published 2 julio 2021

On 21 February 2021, the UK government announced that it intended to remove from UK law the effects of the decision of the Court of Justice of the European Communities in the case of Damijan Vnuk v Zavarovalnica Trigalev (C-162/13), commonly referred to as Vnuk.

In Vnuk the court interpreted Article 3(1) of the First Directive on Motor Insurance (72/166/EEC) (“the Directive”) in a way which meant that compulsory motor insurance extended into uses and places of use that were beyond what had, perhaps, been intended.  The effects of this meant that compulsory motor cover would be required for a greater range of vehicles (simply requiring that the use is consistent with the “normal function” of the vehicle) and for the use of vehicles on private land.  Subsequent decisions in the UK courts demonstrated that not only was UK Law, in the guise of the Road Traffic Act 1988 (“RTA”) incompatible with the Directive in relation to Vnuk, but that the Motor Insurers’ Bureau (“MIB”) was, as an emanation of the state, obliged to meet liabilities as interpreted in Europe, that UK law did not require of it. (Lewis v Tindale and others [2019] EWCA Civ 909)

Last week, Peter Bone MP introduced to the House of Commons a Private Members’ Bill, the Motor Vehicles (Compulsory Insurance) Bill (“the Bill”), “which aims to deliver the necessary legislative change” to achieve the government’s stated aims.  The government has stated that it “will follow the passage of the bill with interest”, whilst acknowledging that it will need to bring forward primary legislation of its own.

To date, no details of the Bill are available, with information currently limited to a written statement from the Secretary of State on the website.  No formal legislative steps were ever taken by the government to bring UK law into line with the Directive in any event.  The UK Parliament website gives a date of 10 September 2021 for the second reading of the Bill, when more detail is likely to be available.  It is a “watch this space” situation.

The EU itself is now taking steps to move away from the extremely wide ambit that Vnuk has left open.  The need for reform of the Directive was recognised by the European Parliament some time ago and has been a long time in the pipeline.  On 22 June 2021, the European Parliament issued a press release announcing an in-principle agreement between it and the Council on the reform of the Directive.  It appears that the reforms will result in motorsports and e-bikes being excluded from the scope of the Directive, together with the potential for the exclusion of non-standard, non-road vehicles, to avoid over-regulation in these areas.

In a post-Brexit environment, steps are being taken on both sides of the Channel to limit the scope of compulsory motor insurance.  Notwithstanding that Private Members’ Bills rarely make it all the way to the statute books, it will be interesting to see whether the Bill proposes to return UK law to the pre-Vnuk position with the limits of compulsory insurance being defined solely by the RTA. If the Bill does not make it into law, it remains to be seen whether, and when, similar proposals will be introduced by the government.


Annabel Lingham

Annabel Lingham


+44 (0)121 698 5449

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