EU court ruling means classics on a SORN may need insurance

See our earlier NEWS item on the Vnuk court ruling
The UK Department for Transport (DfT) has released a consultation document saying they "were prompted to review this area of UK law because of a legal case heard by the European courts in 2014 which resulted in what is known as the "Vnuk judgment". More

Comment
The EU court ruling on the Vnuk case has unwelcome implications in many ways - for motor insurance, for the SORN procedure and for vehicles being used off-road for motorsport. SORNs enable many classic car owners who do not have the rolling 40 year VED exemption relief to save 6 months road tax a year. The timing of the arrival of the Vnuk ruling complications could not have been less welcome for the UK Government. It's likely that government and other bodies involved will be considering the ruling and the DfT consultation with the aim of "responding in due time" but there will be few who will feel keen to do so with any great haste or enthusiasm with Brexit in prospect.


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Updated: 170116
Posted: 170114




















In a lead article in this week's issue of Classic Car Weekly the editor, David Simister, reports "classic owners could be forced to insure their cars even when they aren't on the road following a recent court ruling". The Department of Transport (DFT) has launched a consultation into how it should incorporate the outcome of the ruling by the European Court of Justice. That ruling fell in favour of Damijan Vnuk, a Slovenian man who was knocked off a ladder by a trailer attached to a tractor in a barn which we understand was on private land.


Consequences of the EU Vnuk court judgment
Our earlier report mentioned how insurance premiums might increase in the UK but in this latest CCW report there may be insurance implications for cars on a SORN (Statutory Off Road Notification):

Insurance implications for cars on a SORN
Under the current system in the UK, classic car owners don't have to insure their cars or pay road tax when the registered keeper has declared a SORN and it has been registered by the DVLA. The UK Government is disappointed by the court ruling which interpreted the EU Motor Insurance Directive in a way that "few expected or desired", but "the UK Government must recognise and take account of it in developing new legislative framework governing motor insurance in the UK".The DfT has launched a consultation (see below) on how it should incorporate the EU court ruling but what are the UK Government options? The options are:

1. Amending UK legislation to require every vehicle on a SORN to have motor insurance cover - clearly an onerous requirement and probably beyond the requirements of the EU court judgment.

2. Amending UK legislation to require every vehicle which is used on private land to have motor insurance cover - but what constitutes "use" will need to be clarified.

3. Amending the EU Motor Insurance Directive to require motor insurance cover only if the vehicle is used on private land to which the public have access (for example farmers and land owners) - but clearly the drafting complications and workload in creating and negotiating the amendments will be large. This would be at a time when the greater concern and workload with far more complicated Brexit negotiations will be a far greater concern for the UK Government.

Insurance premiums might increase in the UK
Our earlier report on a CCW article in December 2016 noted the "EU court judgment could result in increased motor insurance premiums in the UK. The UK Government is reviewing the law governing motor insurance which would provide a route for compensation for victims of accidents involving motor vehicles in a wider range of circumstances whist trying to keep the cost-burden to a minimum. The DfT has released a consultation document saying they "were prompted to review this area of UK law because of a legal case heard by the European courts in 2014 which resulted in what is known as the "Vnuk judgment". The DfT document sets out how the insurance provisions in UK domestic legislation work at the moment and then explains why the Vnuk judgment means the UK Government cannot maintain the law as it stands. Although the UK will in due course be leaving the EU, until we do so all the rights and obligations that EU membership entails remain".

Update: comments from Chris Hunt Cooke

The Vnuk judgement and SORN
Taking the most severe possible situation arising out of the EU court judgement, that vehicles must be covered for public liability at all times, let us consider the implications. There are two distinct situations in which a vehicle may be SORNed:

1. Where a vehicle is not likely to be used at any time during the year or is not roadworthy for one reason or another, for example undergoing restoration
RTA cover is likely to have been cancelled, but a prudent owner may have insured the vehicle under a laid-up policy to provide cover against fire and theft. To comply, that policy would need to be extended to cover public liability, if not already covered, but with the minimal risk involved, the additional premium should be very small. Insurance companies will have to amend their policies to ensure compliance, and those owners who leave their vehicles uninsured would have to take out a policy. If they want to incur the minimal possible expense perhaps a public liability only policy would be possible, either as a stand-alone policy or an extension of a household policy. To ensure compliance I envisage that it would be necessary to set up a database, which might conveniently be run alongside the existing MID one.
It would need to be clarified which non-running vehicles would need to be covered, a vehicle being stripped for spares for instance would really cease to be a vehicle at some point.

2. A vehicle which is taken off the road temporarily but which it is intended to be used again before too long, for example a vehicle which is not used during the winter months
If a vehicle is insured under a classic policy, the policy will very often have a mileage limitation anyway, and is well suited to this sort of situation which is effectively envisaged. There would be little point in cancelling such a policy and taking out a new one when road use was resumed, most owners would probably simply let the insurance cover continue, in which case the judgement does not affect them. If the vehicle is insured under a standard policy, the owner might be cancelling the policy and reinstating it during each period it is off the road, possibly covering it on a laid up basis in the interim, although that would involve a lot of bureaucracy and possibly a charge from the broker. If that is happening, then the laid up cover needs to include public liability as above. The insurance industry might develop a policy which could be switched between RTA cover and laid up cover during the course of the policy period, but the administration involved would probably make that unattractive. A restricted mileage standard policy seems a better option.