Fleet policies may no longer cover UK road traffic incidents on private land

The Motor Vehicles (Compulsory Insurance) Bill (‘the Bill’) received its third and final reading in the House of Lords on 25th April 2022, meaning it is now likely to receive royal ascent and be passed into law. Of importance to motor fleet policyholders, the bill will effectively allow motor insurers to reject claims (subject to policy terms) which result from the use of vehicles on private land. 

Following Brexit, the UK government announced in 2021 (opens a new window) that it was their intention to move away from the ‘Vnuk law’ which arose from the 2014 decision of the Court of Justice of the European Union in the matter of Damijan Vnuk v Zavarovalnica Trigalev (C-162/13).

In Vnuk the Court considered the meaning of Article 3(1) of the First Directive on Motor Insurance (72/166/EEC), deciding that there was a requirement on insurers within the EU to provide cover for the use of vehicles whilst on private land. This decision was contrary to the prevailing UK legal position (under the Road Traffic Act 1988) which required an insurer to only cover losses resulting from collisions on a road or other public place. If fully implemented the ruling would also have had the effect of forcing policyholders to take out road traffic cover for a wide range of vehicles that were never intended for use on the roads, such as forklift trucks, golf carts and lawn mowers.

Following royal ascent, policyholders will now need to carefully consider the implications of the legal change to ensure that, should their vehicles be involved in a collision on private land (which is not always clearly defined in the UK common law, but generally refers to places that cannot be readily accessed by the public), they have a policy that will respond to the claim. In most cases this will either be by way of an extension to motor policies or under their public liability cover. 

The change (or more accurately reversion) has been broadly welcomed by those in the insurance industry as bringing an end to a change which was considered to be both costly and inconvenient to implement. The government had estimated that the change would have added £50 to individual premiums.

However, there are some who have concerns about the loss of protection that will result where individuals are seriously injured on private land through the use of motor vehicles, only to find that appropriate insurance is not in place to deal with resulting claims. In such circumstances, innocent injured parties would have to seek compensation directly from the at fault party who, in most instances, would be unlikely to have deep enough pockets to meet the potential seven figure claims that can come with life changing injuries.

For more information, please contact:

Samuel Ellerton – Regional Claims Lead, Senior Vice President*

T: +44 (0)121 232 4563 | M: +44 (0)7787 277771

E: sam.ellerton@lockton.com

* A solicitor authorised and regulated by the Solicitors Regulation Authority

This document is in no way intended to provide legal advice. The recipient of this note should obtain independent legal advice from a suitable practitioner as required. Lockton Companies LLP does not accept any liability with respect to reliance upon the content or accuracy of this note.