Motor Vehicle (Compulsory Insurance) Act 2022

• Published date: 31 May 2022
• Subject Matter: Insurance, Litigation, Mediation & Arbitration, Insurance Laws and Products, Personal Injury
• Law Firm: 1 Chancery Lane
• Author: Ms Sarah Prager

1.What impact will this Act have on road traffic accidents claims?

The Act is a very short one, just two sections. Section 1 sets out what it is intended to do; within Great Britain:

(1) To the extent that Article 3 of the 2009 Motor Insurance Directive (as it had effect at any time) is relevant to any question as to the interpretation or effect of any provision of this Part, references in that Article to liability in respect of the use of vehicles are to be read as not including liability in respect of the use in Great Britain of vehicles'

(a) other than motor vehicles, or

(b) otherwise than on a road or other public place'

(3) Relevant section 4 rights cease to be recognised and available so far as they relate to compensation in connection with the use in Great Britain of vehicles'

(a) other than motor vehicles, or

(b) otherwise than on a road or other public place.

(4) Accordingly, to the extent that it is inconsistent with subsection (1) or (3), retained case law ceases to have effect.

Essentially, then, it is no longer compulsory for motor insurance to cover vehicles other than motor vehicles or vehicles being used on private land, and the body of caselaw which followed the decision of the Court of Justice of the European Union in Vnuk v Zavarovalnica Triglav (Case C-162/13) will not be followed in respect of accidents occurring after the Act comes into force.

2.What impact will this Act have on insurers?

The Act has no direct effect on individual insurers at all, in the sense that the decision in Vnuk only ever had the effect of rendering the Motor Insurers' Bureau, as an emanation of the state, liable for uninsured losses arising out of accidents involving vehicles such as those referred to in the Act; mobility scooters, go-karts, farm machinery and the like, and accidents occurring on private land. However, following the decision of the CJEU the government commissioned a report on the likely cost to insurers of imposing compulsory insurance for these categories of accident, and this report concluded (with some very significant caveats) that the cost might be almost '2 billion a year, which would of course be passed on to motorists in the form of increased premiums (hence the headlines stating that the Act will save every motorist an additional '50 per year in premiums). However, the authors of the report pointed out that their figures were subject to 'a high level of uncertainty' and that 'alternative reasonable assumptions could produce very...