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Slovenian farm hand changes the scope of motor insurance policies

23/02/2015

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Ireland

A recent insurance compensation case involving a Slovenian farm hand broadens the scope of motor insurance policies.  Killian O’Reilly looks at this development.

In August 2007, when Mr Damijan Vnuk was stacking hay bales in a Slovenian barn, it’s likely that his mind was not on the finer points of European Directives and Road Traffic legislation. Mr Vnuk tumbled to the ground when the ladder he was on was hit by a tractor and trailer. He sought compensation from the tractor’s insurers, but his case initially failed because the Slovenian courts found the insurance did not cover the tractor’s use in a farm yard. Like Ireland, the Slovenian equivalent of our road traffic legislation required vehicles to be insured when they were on the road or other public place – but not necessarily when they were on private land. However, Article 3(1) of EC Directive 72/166/EEC (as consolidated into the Sixth Directive in 2009) requires each member state to:- “take all appropriate measures to ensure that civil liability in respect of the use of vehicles is covered by insurance”. Importantly, the Directive does not provide a distinction between public or private places. Mr Vnuk’s case was appealed to the Slovenian Supreme Court which in turn asked the CJEU to decide whether the Slovenian Law was compatible with the Directive. Much of the debate surrounding the limits of the Directive centred on technical differences between its various translated versions. Some versions suggested that insurance was only required in public places while others did not draw a distinction between public and private places. The CJEU decided that where there are differences of language, one cannot simply rely on a literal interpretation of the Directive, rather, one must instead look to the general scheme of the Directive to decide which interpretation “best serves the Directive’s objectives”. In the context of this Directive, one of the stated aims was to protect victims of accidents caused by motor vehicles. The Court held that it cannot be interpreted that the intention of the European legislation was to exclude injured parties to an accident caused by a vehicle in the course of its use, if that use was consistent with the normal function of that vehicle. Ultimately, the CJEU decided that the concept of “use of vehicle” in Article 3(1) of the Directive covers any use of a vehicle that is consistent with the normal function of that vehicle. This decision will have a direct impact on motor insurers in various ways, not least of which is a broadening of the scope of their exposure. It will also require insurers to review and amend their policy wording to ensure that it is in alignment with the expanded definition of vehicle use. The Department of Transport is understood to be considering what changes need to be made to our existing road traffic legislation in light of the decision and it may be that there will be an additional role for the Motor Insurers Bureau of Ireland (MIBI) in that regard.