September 4, 2014

Compulsory Motor Insurance - Damijin Vnuk v Zavaravalnica Traglav d.d. (European Court of Justice)

The European Court of Justice has extended the definition of 'use of a motor vehicle' to include any use that is consistent with the vehicle's normal function and is not limited to merely use of the vehicle as transport on a public road.

This was a Slovenian case that involved a tractor and trailer that was being manoeuvred in the courtyard of a farm when it hit the ladder the Claimant was stood on, causing him injury.

The Slovenian courts dismissed the claim on the basis that compulsory insurance was limited to circumstances where the tractor was being used as a means of transport, not just where its function was as a machine.

The matter was referred to the European Court of Justice which found that the definition of motor vehicle in the First Motor Directive was not limited to the use being made of the vehicle at the time. It gave a much wider definition which included any use that was consistent with the normal function of the vehicle. The scenario in question fell within this wider definition.

COMMENT:

  • This decision is likely to extend the mandatory insurance obligations contained in the Road traffic Act 1988.                                                            
  • Although Member States have authority to exempt certain vehicles from the mandatory insurance provisions, this will move the vehicles into the jurisdiction of the MIB, raising concern this would only increase the levies payable to the MIB.
  • It may be that the decision has limited practical effect; as such vehicles could fall within a liability or household policy. However such cover may not be compliant with the RTA.