Ian Leach: Motor insurance in a post-Brexit Scotland
Ian Leach, partner at BLM in Scotland, details the issues surrounding the future of motor insurance in a post-Brexit Scotland.
Scots law has had - and continues to have - many influences, from ancient Rome to the modern day parliaments and courts. European, UK and Scottish legislation all continue to play a part in Scots law albeit that Brexit has greatly diminished the European influence in terms of new EU laws post-UK exit and enabled UK parliaments to depart from pre-exit EU laws where permissible.
Under the Scotland Act 1998, certain matters of Scots law are reserved to the exclusive legislative competence of the UK parliament. Motor insurance is one such matter.
This article considers a developing story of UK motor insurance law. The story begins on the morning of 13 August 2007 on a Slovenian farm when a trailer attached to a tractor knocked over a ladder which Damijan Vnuk was using to load hay into a barn. Vnuk sued for damages for his injuries from the driver who had reversed the tractor. The result of the ensuing court case had EU-wide implications, with governments required to change their member state’s laws to bring them into line with the ultimate 2014 judgment of the Court of Justice of the European Union (CoJ) at Luxembourg. Vnuk’s case went all the way to CoJ because the Slovenian courts had ruled that the tractor was not being used for its main purpose - it was not being used as a means of transport but, instead, to push a trailer into a barn so the question of motor insurance was, as the Slovenian courts saw it, irrelevant.
CoJ overturned the Slovenian courts’ decision by ruling that the definition used in the EU Motor Insurance Directive - about “any use of a vehicle consistent with the normal function of that vehicle” - should apply in the Slovenian farm situation and, by implication, that all EU member states would have to change their laws to make motor insurance compulsory for vehicles such as golf buggies, mobility scooters, ride-on lawnmowers, off-road quad bikes, fork lift trucks, Segways, fairground dodgems and the like wherever they were driven, whether on public or private land, in the particular member state.
In the UK context, the CoJ ruling meant that the definition used in the Road Traffic Act 1988 (RTA) - which applies to “a mechanically propelled vehicle intended or adapted for use on roads” and leads to such a vehicle needing insurance on a “road or public place” - had to be changed to bring all qualifying vehicles into the arena of compulsory motor insurance.
Then Brexit happened and, on 21 February 2021, the UK Department for Transport announced that the UK government intends to amend UK motor insurance law to diverge from the EU model by dis-applying all legal effects of the 2014 CoJ decision. In essence, UK government intention is to revert to compulsory insurance for particular, approved road vehicles used on “a road or other public place” in England, Wales and Scotland. Any decision on whether an equivalent change is made for Northern Ireland will be a matter for the NI Executive.
The UK government has indicated that reversing the 2014 CoJ ruling will avoid an average increase of £50 on annual insurance premiums for British drivers. The changes are likely to be brought into effect by amendment to the existing British RTA legislation. The timing for this remains unclear at present.
Brexit has happened. The story of Scots law, and what it means for motor insurance premiums and insurers’ motor liability, continues.