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Amendments to the EU Motor Insurance Directive

Risk & Analytics|Risk Management Consulting
Insurer Solutions

By Mark Prowting and Stewart Osmond | March 4, 2020

How do you define the use of a vehicle ?

In 2018, the European Commission clarified that the ‘use of a vehicle’ – which defines the scope of compulsory motor insurance required by the Directive1 - related to any use of a vehicle intended to serve as a means of transport, consistent with the normal function of the vehicle and irrespective of the terrain on which it is used.

The European Parliament has however approved a report2 which favoured that ‘use of a vehicle’ must relate to use ‘in-traffic’. It also suggested amending the Directive to include use ‘as a means of transport’ to distinguish between vehicles being used as machines, where tools of the trade exclusions usually apply. It seems unlikely that the Commission will define what is meant by ‘in traffic’. This is likely to be left to member states to decide.

Parliament also recommended that the Directive should not apply to motor sports vehicles used on a dedicated track.

Parliament also recommended that the Directive should not apply to motor sports vehicles used on a dedicated track.

The legislative process

The Commission is continuing to look at the amendments and we would expect to see revisions to the Directive being agreed in the first half of 2020 ready to come into law by mid-2021.

It’s unclear how this will affect the UK due to Brexit. At the time of writing, it seems likely that UK motor policies will remain closely aligned with the European regime irrespective of the outcome of Brexit.

Examples of how ‘use of a vehicle’ has already expanded claims


Example A: Upheld claim

  • A car parked in the internal garage of a private building and not driven for over 24 hours caught fire as the result of an electrical fault.
  • The building’s insurers decided to claim for the damage to the building against the motor insurance.
  • The court agreed that the damage arose from ‘use of a vehicle’ and approved the claim.

Example B: Pending claim

  • A claimant suffered injuries after slipping on an oil leak from a car parked in a private car park in a private housing complex.
  • The court is being asked to decide whether ‘use of the vehicle’ in the Directive should be interpreted to include the circumstances in which the injuries were sustained by the claimant.

European issues and Directive reforms

  1. 01

    UK Road Traffic Act 1988

    “motor vehicle” means a mechanically propelled vehicle intended or adapted for use on roads3

    A person must not use a motor vehicle on a road or other public place unless there is in force in relation to the use of the vehicle by that person such a policy of insurance…4

  2. 02

    EU Motor Insurance Directive

    ‘vehicle’ means any motor vehicle intended for travel on land and propelled by mechanical power5

    ‘Use of a vehicle’ means any use of such vehicle, intended normally to serve as a means of transport, that is consistent with the normal function of that vehicle, irrespective of the vehicle's characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion.“
    [European Commission’s proposed amendment]

    ‘Use of a vehicle’ means any use of a vehicle in traffic that is consistent with the vehicle's function as a means of transport at the time of the accident, irrespective of the vehicle's characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion;
    [European Parliament’s proposed amendment]

Willis Towers Watson insight:

The legislative landscape is ever changing and with Brexit on the horizon, could change again rapidly in the very near future. It is therefore essential to maintain close dialogue with your broker to keep pace and to ensure large claims reserves are being challenged / negotiated appropriately. Willis Towers Watson of course has the capabilities to provide this valued support.

Insights from the Annual Fleet Forum held 10th October

Footnote

1 https://ec.europa.eu/info/business-economy-euro/banking-and-finance/insurance-and-pensions/motor-insurance_en

2 http://www.europarl.europa.eu/doceo/document/A-8-2019-0035_EN.pdf

3 http://www.legislation.gov.uk/ukpga/1988/52/section/185

4 http://www.legislation.gov.uk/ukpga/1988/52/part/VI/crossheading/compulsory-insurance-or-security-against-thirdparty-risks

5 http://www.legislation.gov.uk/cy/uksi/1973/2143/made?view=plain

Authors

Account Director, UK Land Transportation

Haulage & Logistics Director

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