Motoring on - the bumpy road to MID reform
In May 2018 the European Commission published its legislative proposal for changes to the EU rules on motor insurance. This followed its 2017 REFIT consultation which sought views on updating a number of areas of the Motor Insurance Directive (2009/103/EC "MID"). One of those areas concerned the scope of the MID and was prompted by the CJEU's decision in Vnuk and subsequent cases. The Commission's proposal on the issue of scope came as a surprise to many, given the previous indication of a preference for the MID to apply compulsory cover to only vehicles "in traffic". The Commission instead then favoured retaining the court's interpretation in Vnuk subject to that approach being codified in a revised MID.
In July 2018 DWF and others provided feedback on the proposals, highlighting the disproportionality of the financial and administrative cost to risk in the Commission's approach.
The next stage in the legislative process is for the European Parliament and the Council to examine the proposal. To that end, the Internal Market Consumer Protection Committee (IMCO) of the European Parliament has now published its draft report (opens in pdf), prepared by an appointed MEP known as a rapporteur. The report significantly changes direction back to the "in traffic" route. Here, we take a look at the rapporteur's suggested amendments.
IMCO draft report
Use of a vehicle
In a marked shift from the European Commission approach, the rapporteur's draft proposal is that compulsory cover should be required for those vehicles "in traffic". In traffic means "in circulation" on a public or private road, and private roads include driveways, parking lots and docking and loading stations or equivalent areas which are accessible to the public.
Significantly, vehicles used exclusively in "closed areas," not accessible to the public, would not be "in traffic" and would not therefore need to be insured under the compulsory regime.
However, if a vehicle falls within the category of those vehicles requiring cover because it is used "in traffic" at some point, any liability arising from its use would be required to be covered whether or not such use was in an area accessible to the public or within a closed area. This requirement is subject to the proposed exception for motorsports. In addition Member States may limit non-traffic related cover where there "can be no reasonable expectation of cover". The example given is the machine function of a vehicle such as a tractor.
There has been widespread and well publicised opposition to a Vnuk approach from the motorsport industry. The rapporteur takes on board the concerns raised and excludes vehicles used in motor sports from the requirements of compulsory insurance under the proposals. The basis for this exemption is said to be the limited risk to unrelated vehicles and persons associated with motorsport given it is conducted in a controlled environment. Reference is also made to more specific insurance usually being carried by motorsports, though there is no requirement that any other insurance should be in place.
Small and new types of vehicles
The rapporteur believes that the MID should not cover new types of vehicles such as Segways and electric bikes, making reference again to the disproportionality of compulsory cover to the very limited risk associated with such vehicles. The potential detriment to the market for such vehicles of imposing compulsory insurance is also highlighted. Instead, the proposal is that only vehicles which are subject to type-approval requirements should be covered, the rationale being that type-approval is limited to vehicles which travel at above 25kph.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.