Who is responsible where an accident involves hauliers loading and unloading their vehicles, forklift trucks in a company’s yard, a digger crossing a road to a construction site, a farm vehicle in a field? This has been a grey area for many years with claims often directed to the motor insurers in the first instance and then being bounced back to public liability insurers. These claims can, therefore, take longer to settle due to the lack of clarity as to who is responsible. A recent case in Europe has brought this grey area to the fore in the UK insurance market.
A public liability policy will indemnify any person entitled to indemnity against all sums which they become legally liable to pay as damages and claimants costs and expenses arising out of accidental:
- Injury to any person
- Loss or damage to material property
- Obstruction trespass nuisance or interference with any right of way light air or water
- Wrongful arrest detention imprisonment or eviction of any person
… occurring in connection with the business during the period of insurance within the territorial limits.
However, a public liability policy will exclude liability arising from the use of a motor vehicle where the Road Traffic Act applies, as this cover must be arranged under a motor policy.
If your client’s tractor or machine is registered for road use it must either be SORN’d or insured for third party road risks.
Third party insurance for ‘motor vehicles’ used on a ‘road’ is compulsory and governed by the various Road Traffic Acts.
‘Motor vehicles’ can include all motorised plant, for example, forklift trucks, diggers, tractors and cranes etc.
So where lies the confusion?
A frequently asked question is whether an individual can drive uninsured on private land. As it is not public land, on which it is illegal to drive without insurance, there is a commonly held belief that an individual can legally drive without insurance. This is true to some extent. If your client has a right to use private land to which the general public does not have access then you are within your rights to drive on that land without insurance.
However, if the public do have access to the private land then your client must have insurance in order to drive lawfully on that land. A private holiday park, for example, would not be deemed private land in terms of insurance, as it is clearly a place to which the public have access. For public policy reasons, therefore, you must have insurance to drive on this land, even if it is your own private land.
What if an incident occurs on private land and I am not insured?
The UK motor insurance industry is now impacted by events and rulings in Europe. A recent accident in Slovenia has triggered the European Court of Justice to look at the need to insure against civil liability in respect of the use of motor vehicles under the EU Motor Directives.
Under current UK law, there is no requirement to insure your vehicle if it is used only on private land. Where the public do not have access e.g. a farmer may not insure an old Landrover that is only used on fields, and should an accident happen on private land, the insurance company has no obligation to pay out.
Case Study – Vnuk v Triglav
Mr Vnuk was on a ladder which was hit by a tractor reversing a trailer in a farmyard. Falling from the ladder, he was injured and sought compensation from the driver’s insurers, but his case failed. The Slovenian court ruled that the requirement for compulsory motor insurance was limited to the use of the tractor as a vehicle on the road, and the insurance would not, therefore, cover it being used to reverse a trailer in the farm yard.
Mr Vnuk appealed to the European Court where the relevant European law, which applied to the UK and other member states, was considered. The European Court decided that motor vehicle ‘use’ should be interpreted to cover “any use of a vehicle that is consistent with the normal function of that vehicle.”
Here is a link to the EU press release where the Court of Justice acknowledges the current grey area.
What the UK law currently says
Under Article 3(1) of European Directive 72/166/EEC, a member state of the European Union must take all appropriate measures to ensure that should a person be liable under the law in respect of the use of a vehicle, their liability is covered by insurance.
The equivalent UK law that brings in the provisions of the Directive is the Road Traffic Act 1988. However, under the Act, the duty to take out third party motor insurance, and the scope of cover that UK motor insurers must provide, is limited to “the use of the vehicle on a road or other public place”. The Act also defines a motor vehicle as being “a mechanically propelled vehicle intended or adapted for use on the roads”. The UK government has chosen to exclude certain vehicles from the need to have RTA cover. These include:
- Vehicles owned by certain public authorities
- Vehicles owned by a police authority
- Vehicles on a journey for salvage purposes under the Merchant Shipping Act 1995
- Vehicles owned by a national health service body
- Ambulances owned by an NHS Trust
- Vehicles made available under NHS Act 2006
- Vehicles owned by a person who has deposited £500,000
- Invalid carriages
- Tramcars or trolley vehicles operated under statutory powers
- Vehicles in the public service of the crown
As mentioned previously, under current UK law, there is no requirement to insure your vehicle if it is used only on private land where the public do NOT have access.
European Court ruling
In Mr Vnuk’s case, the Court held that the reversing tractor propelling a trailer was covered by the duty to insure under the EU Directive. The fact that the vehicle, together with its attachment, could be used as agricultural machinery, did not affect its status as a “vehicle”. The “use” of a motor vehicle covers any use of a vehicle that is normal and typical for that vehicle. The location of the vehicle, whether on private land or the road, is therefore irrelevant.
The European Court’s decision in Vnuk v Triglav will mean that the Road Traffic Act 1988 needs to be reviewed and ultimately amended to reflect how the Court has interpreted the EU Directive. The requirement to insure must no longer be limited to situations where the vehicle is being used on a road or other public place. EU member states do, however, have the ability to derogate certain types of vehicle meaning their claims would fall on the MIB. It is likely that when the changes to the law are made, not all vehicles used exclusively on private land will need to be insured.
The case of Vnuk has highlighted that the Motor Insurance Directives have been implemented incorrectly into UK law, as well as many other EU nations, such that victims of accidents who are rightly entitled to compensation are being denied justice. It is for this reason that the Road Traffic Act needs to be reviewed and amended.
One impact of this ruling could have been that a wider definition of motor vehicles was adopted including over thirty new types of vehicles including:
- Sit on mowers
- Forklift trucks
- Golf buggies
- Electrically assisted pedal cycles
- All mobility scooters
- Museum exhibits
- Segways and even remote control vacuum cleaners!
It looks as though provision will be made for the MIB to meet any claim not satisfied by the owner of some vehicles in the same way as any uninsured vehicle. The forthcoming consultation to correct our legislation and to look at how the insurance industry should deal with changes is currently underway.
Motor or Liability?
In summary, the grey area is currently a little more grey than it was, but will become clearer! It is important to understand the ins and outs to be able to advise your clients correctly. The important thing to remember is that liability policies will exclude any incidents which require compulsory motor insurance. Yutree’s liability wordings deal with this by saying that they do not provide indemnity:
– in respect of which compulsory insurance or security is required under any legislation governing the use of the vehicle, or
– for which compulsory motor insurance or security is required under the Road Traffic Act 1988 as amended by the Motor Vehicles (Compulsory Insurance) Regulations 1992 and the Road Traffic (Northern Ireland) Order 1981 as amended by the Motor Vehicles (Compulsory Insurance) Regulations (Northern Ireland) 1993 or any other Compulsory Road Traffic Legislation
It is then down to helping your clients to ascertain whether their vehicle is classified as a ‘motor vehicle’ under the Road Traffic Act and whether it will be used on private or public land.
BIBA (British Insurers Brokers Association) have been doing a lot of work on this subject to try and influence an outcome which works for the UK market. They are attempting to amend the motor insurance directive but if this is not possible then some vehicles will be derogated to the MIB, some will require new policies and some may even be limited to directive minimum cases only (which is lower than the UK Road Traffic Act). If you have any queries on the matter please feel free to contact me and, if required, I can refer to BIBA on your behalf.
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