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The Motor Vehicles (Compulsory Insurance) Bill has been passed by Parliament and now awaits Royal Assent before it becomes law.

The Bill was introduced in response to the EU ruling in the case of Vnuk.  In this case the European Court of Justice (CJEU) held that the Motor Insurance Directives should be interpreted such that compulsory insurance for the use of motor vehicles should be consistent with the normal function of the vehicle, including their use other than in traffic and their use on private land.

The outcome of this case meant that compulsory insurance could have been required for a range of vehicles including golf buggies, ride on lawnmowers and mobility scooters. It also extended the need for motor insurance to be required for vehicles on private land such as farmland even extending to motor sports where an accident would have been treated as a regular road traffic accident that would require motor insurance.   In many of these cases there will be other insurance policies in place to cover certain risks and the requirement for motor insurer is therefore considered unnecessary.

The Bill amends the Road Traffic Act 1988 by confirming that any interpretation of the Directives in relation to liability in respect of the use of vehicles is limited to motor vehicles that are on a road or public place.

It is estimated that this change in law will prevent a £2 billion increase in the insurance industry, which could have meant an increase in insurance premiums for motorists of £50. It is also estimated to save the motor sports industry over £458 million per year which could have seen its collapse.

It remains the case that motor insurance is compulsory for any motor vehicle being driven on a road or public place.

More details can be found here.