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Insurance Update: Extension to Compulsory Motor Insurance

05 September 2014

Irish law obliges drivers to have motor insurance to cover accidents occurring in a public place.  However as a result of yesterday's ruling by the European Court of Justice (“ECJ”), compulsory motor insurance has to cover any accident caused in the course of the use of a vehicle that is consistent with the normal function of that vehicle.  In other words, the location of the accident is irrelevant.   

The story starts in August 2007 when a Slovenian National Mr. Vnuk was knocked from a ladder by a reversing tractor and trailer in a farm yard.  He sought compensation from the motor insurers of the tractor which was declined on the basis that the accident occurred in a private place and so was not covered by the policy.   After an appeal, the Slovenian Supreme Court referred a question to the ECJ for a preliminary ruling. 

The Advocate General gave an opinion in February 2014 that supported the view expressed by Mr. Vnuk that the concept of use and so the requirement for insurance cannot be confined to journeys on a public road.  

A number of member states expressed their concern at the opinion and sought to make submissions but this was rejected by the ECJ.  In particular, Ireland sought to impose temporal limits on the effect of any judgment, again without success.  

Comment

As things stand, Ireland must comply with this ruling and so motor insurance should be in place for motor vehicles irrespective of whether an accident occurs in a public or private place.  This will undoubtedly have significant impact on underwriters and on claims.  The Department of Transport is said to be examining the implications of the judgment for Ireland and further developments are anticipated.  We will update you as these developments arise.

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