Beginning in 1972 the EU brought into force a number of Directives to regulate and harmonise motor vehicle insurance law throughout the EU.
The Directices were binding on the UK. The Directives were meant to ensure that third parties injuried in motor accidents would get compensated. There was only one exception where the claimant willingly got ionto a vehicle he knew had been stolen. Supposedly to give effect to the Directives the UK enacted the Road Traffic Act 1988. In terms of Part (VI) of the Road Traffic Act, a scheme was enacted that was supposed to be compulsory, that every vehicle on the road had to be insured against the risk of injury to a third party.
As part of this scheme, Section 151 of the Road Traffic Act imposed a duty on road traffic insurers to pay up in respect of any judgement obtained against a motorist who had injured a third party with his or her vehicle.
Unfortunately, what should have been a simple and straightforward scheme to protect third parties became an unholy mess. Due to lobbying by road traffic insurers, all sorts of loopholes were found in the Road Traffic Act, whereby insurers could avoid their liability. All these loopholes were undoubtedly contrary to European law which was binding on the UK. Over the years, most of those loopholes have been closed (ironically just as we are leaving the EU), but one loophole remained. In terms of Section 152 of the Road Traffic Act, insurers could avoid their liability to third parties if they could prove that their insured had obtained his or her policy from them, either by a misrepresentation or a failure to disclose important information such as previous road traffic convictions.
In 2017, a case came before the Court of Justice in the European Union where it was ruled that any legislation such as the Road Traffic Act which allowed insurers any means of avoiding their liability was contrary to EU law. Later in 2017, the UK Government conceded that Section 152 of the Road Traffic Act broke EU law. The Government promised to sort this out. Finally, over two years later, the Government has done by enacting regulations the Motor Vehicles (Compulsory Insurance) (Miscellaneous Amendments) Regulations 2019 which came into force on 1 November 2019. The regulations sweep away the right of insurers to avoid liability under Section 152.
Benefits to claimants
Claimants can, after 1 November 2019, make claims or take claims to court confident in the knowledge that if the driver is insured, that the insurers cannot dispute liability under the Road Traffic Act, even if the policy was obtained due misrepresentation or failure to disclose.
Now, claimants can press ahead with their claims or court cases, safe in the knowledge that if a judgement is obtained, the insurers will have to cough up. As well as greater certainty, the regulations should avoid significant delays. The whole process for insurers to evade liability under Section 152 was a torturous one.
Insurers had to:-
- raise a separate action in court to declare they were entitled to avoid the policy;
- these proceedings had either to be raised before the claimant's action, or within 3 months of its commencement
- give notice to the claimant of the declarator proceedings - these proceedings caused more expense and more delay.
Benefits to Insurers
Again, there is greater certainty. Insurers will know that it is now not in their interests to try and avoid liability under the policy and it will be cheaper for them to simply pay up. Insurers will avoid the expense and delay of declarator proceedings. In many cases, all the declarator proceedings achieved was for one insurers to unfairly palm off their liability onto another.
We have a dedicated team which deals with all manner of road traffic claims and we can advise you on the UK./EU/Insurance law involved. You can contact us by using our online enquiry form or by calling us on 0800 988 8082