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The Motor Vehicles (Compulsory Insurance) Act 2022: a System Restore Point

When Damijan Vnuk, a Slovenian farmer, was knocked off his ladder by a reversing tractor inside a hay barn on private land, as long ago as 2007, it is safe to assume that he had more immediate concerns than the impact of his accident on European motor insurance law. He would have been baffled to learn that it would take seven years for his case to reach the ECJ in 2014; and fifteen years before the UK, at least, moved to introduce legislation in an attempt to settle the point that his accident raised.

The Motor Vehicles (Compulsory Insurance) Bill passed through its final Parliamentary stages on 25th April 2022 and will imminently receive Royal Assent, coming into force two months after that.

The purpose of the Act is to clarify a separation of UK domestic law from European motor insurance Directives; and to impose clear boundaries around the types of vehicles attracting compulsory insurance, and where that coverage is required.

Before the Vnuk case (Damijan Vnuk v Zavarovalnica Triglav d.d, Case C-162/13, ECJ – “Vnuk”), the parameters of the arguments around compulsory motor coverage in the UK were relatively clear.  S.143(1)  of the Road Traffic Act 1988 (“RTA 1988”) forbids the use of a “motor vehicle” on a “road or other public place” without insurance complying with the subsequent sections.  By s.145(3), for instance, the policy must cover liability for death, injury or property damage  “caused by, or arising out of, the use of the vehicle on a road or other public place”.

“motor vehicle” is defined at s.185 as “a mechanically propelled vehicle intended or adapted for use on a road”.   This would exclude, for example, most ride-on mowers, and many agricultural vehicles.

“road” is defined in s.192 as “any highway and any other road to which the public has access, and includes bridges over which a road passes”.  That definition has provided some fertile ground for argument.  In an often-cited Scottish case of Harrison v Hill 1932 JC 13, a farm road connecting a farm to a public highway was held to be a road because the public were regularly to be found on it.  Lord Sands said:- “In my view, any road may be regarded as a road to which the public have access upon which members of the public are to be found who have not obtained access either by overcoming a physical obstruction or in defiance of prohibition express or implied”.

The words “or other public place” were added to s.143 and 145 only in 2000 by the Motor Vehicles (Compulsory Insurance) Regulations 2000, following the decision in the conjoined cases of Clarke v Kato and Cutter v Eagle Star Insurance Co. [1998] 1 WLR 1647 in which the House of Lords,  reversing the Court of Appeal, held that a car park did not constitute a “road”. In other words, the 1988 Act then had to be amended to ensure that the reach of compulsory motor insurance now covered car parks (and other public places).

Other marginal cases which tended to get lawyers excited would often concern the interpretation of “caused by or arising out of the use of” – see for instance Dunthorne v Bentley [1999] Lloyd’s Rep 560, in which a motorist running across a road to get petrol for her stranded car caused another car to crash.  More recently, in Pilling t/a Phoenix Engineering v UK Insurance Ltd [2019] UKSC 16, the Supreme Court had little difficulty in concluding that a fire was not sufficiently “caused by or arising out of the use of” a car where it was accidentally started by a welder who had raised the immobile and unpowered car on a forklift to repair its underside.

The Vnuk decisionVnuk was referred to the ECJ by the Slovenian Supreme Court, which had found itself troubled by the tension between its domestic law and the First Motor Directive (72/166/EEC, later consolidated in the Sixth Directive of 2009 – collectively “the Directive”).  In simple terms, Art.3(1) of the Directive requires that member states must “take all appropriate measures to ensure that civil liability in respect of the use of vehicles is covered by insurance” – without limiting the type of use referred to.  Art. 1(1) defines “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’ – so crucially different to the UK’s definition at s.185 of RTA 1988.   Slovenian domestic law, too, was more restrictive, requiring compulsory insurance for the tractor as a means of transport, but not when it was used as a machine or propulsion device – as it was being used at the time of the accident, and which was why Mr Vnuk’s case had failed before the domestic courts.

The ECJ held that Art.3(1) must be interpreted so that “use of vehicles” “covers any use of a vehicle that is consistent with the normal function of that vehicle”.

The Consequences of Vnuk:  The ECJ’s broad interpretation of “use of vehicles” combined with the definition of “vehicles” in Art 1(1) opened the door to some surprising possibilities:  compulsory insurance even for vehicles such as golf buggies, ride-on mowers, powered wheelchairs and mobility scooters, forklift trucks, and construction and agricultural machines, regardless of whether they were designed or adapted for use on roads, or whether they were in fact on public or private land at the time of the relevant accident.

The UK Parliament did not amend RTA 1988 to bring it into line with the Vnuk decision, so the ambit of compulsory insurance remained unchanged.  What did change, though, was the ability of claimants injured (for instance) on private land to pursue a direct claim against the UK government for failing to implement the Directive; and to obtain damages, not from a domestic motor insurer, but from the MIB in its capacity as the guarantee body designated by the UK to meet European compulsory insurance requirements.  This was the situation in Lewis v Tindale & ors [2018] EWHC 2376, and thereafter in the Court of Appeal at [2019] EWCA Civ 909,  where a claimant pedestrian was run down by the uninsured defendant driver on private land and succeeded in his action not just against the driver but also the Secretary of State and the MIB.

An impact analysis carried out by the Government Actuary’s Department between 2017 and 2019 calculated that if the RTA 1988 were amended to extend compulsory coverage to align domestic law with the Directive, the annual cost to the domestic insurance industry, which would inevitably be passed on to motorists, would be around £2 billion.  As it was, the domestic insurance industry was already having to meet Vnuk– and Lewis-type claims indirectly,  by the mechanism of the MIB levy.

The UK’s withdrawal from the EU did not have the automatic effect of terminating the application of the Directive in the UK, because of the provisions of s.4 of the European Union (Withdrawal) Act 2018 which, broadly, converts into domestic law all pre-existing rights and remedies available under EU law unless otherwise provided.  In order to prevent the bringing of further Vnuk– and Lewis-type claims, then, legislation was required to the create an exception to the Withdrawal Act.

That is what this short Motor Vehicles (Compulsory Insurance) Act 2022 will do – setting out, particularly at sections 1 and 3, that we are back where we started:  compulsory insurance is not required for anything other than “motor vehicles” (i.e. the s.185 RTA 1988 definition), nor is it required in respect of liability arising “otherwise than on a road or other public place”.

As you were, then.

Patrick Blakesley KC

4th May 2022.


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