Facilities managers must get their heads around changes to the Road Traffic Act that could affect their off-road vehicles, says insurance law expert Alistair Kinley
8 October 2015 | By Alistair Kinley
We have seen the occasional tabloid article saying that, because of the European Union, people will soon need to insure their ride-on lawnmowers under a motor policy.
However ludicrous that may sound, the reality is that something along those lines could happen.
While newspapers have chosen lawnmowers and golf buggies as commonly used 'vehicles', what some have failed to uncover is how far-reaching the implications of the European Court's decision in the Vnuk case really are.
August 2015 marked eight years after a tractor knocked Damijan Vnuk off a ladder while he was loading hay into the upper floor of a barn in rural Slovenia. Although he tried to claim compensation for his injuries from the tractor driver's insurers, the case failed because courts found that the insurance did not cover the tractor's use when manoeuvering on a farmyard. His claim ended up in the European Court last year and the subsequent decision means that there will have to be changes to our motor insurance legislation.
As a result of this Europe-wide case, the UK Government will very soon have to change the rules about compulsory motor insurance and address accidents and risks that will have to be covered by it.
Incidents and vehicles caught
The imminent change will affect anyone operating vehicles in the facilities industry. Nearly every company's insurance arrangements could be affected, because some vehicle incidents currently covered under employers' liability (EL) and public liability (PL) insurance policies will have to switch over and be picked up by a motor policy. The current Road Traffic Act (RTA) will have to be amended in Parliament.
The law change is highly likely to bring into its scope a range of off-road vehicles and situations that would not previously have been included in motor policies, unless the government makes a special exemption for specific types of vehicle when it consults on reform. We expect that to take place later this year.
This is where those operating in the facilities management sector should take particular note, because any vehicles used in off-road settings will require insurance cover that complies with the amended law.
This could mean that vehicles such as sit-on cleaning equipment, tractors, cherry pickers and forklift trucks used to move goods around a depot would fall into the scope of a motor (fleet) policy to ensure that they are covered should they be involved in an accident on private property.
Although there is no change in the underlying accident risk - facilities companies will remain liable for their employees' negligent driving, whether on or off-road - the insurance differences are important. Unlike EL and PL policies, motor policies legally have to provide unlimited cover for personal injury claims. And any insurer offering a policy for Road Traffic Act risks has to be a member of the Motor Insurers' Bureau (MIB) and has to pay in so that the MIB can meet claims caused by uninsured and untraced motorists - a cost that EL and PL insurers don't have. Not all insurers currently covering off-road and special vehicle risks are members of the MIB.
The changes outlined here will not take effect until the Road Traffic Act is amended in Parliament and will apply only for claims happening after that.
We expect that the government will start consulting about how to make the changes well before the end of this year. Following that, it is entirely possible that the act could be altered in the first half of 2016 (at the earliest).
A societal necessity
A legislative response to the Vnuk case is needed, but discussion of the right thing to do will inevitably be polluted by the troubled nature of the UK's relationship with the EU as a whole. Predictably, the UK's tabloid press has described the decision in Vnuk as "bonkers" and "insane". It is neither. Instead, it should properly be seen as an incremental interpretation of the scope of compulsory insurance; a societal necessity recognised in the UK long before we joined the EU. What is perhaps crazy is the consequence that a cleaner on a motorised sit-on floor polisher could end up having to be insured in the same way as someone who commutes round the M25 every day.
The consultation, expected to start later in the year, should be regarded as a great opportunity for companies in the facilities sector to reassess their business insurance policies and make sure they are fully protected from the risks they face.
It's about time to take your hard hats off and put your thinking caps on.
The Road Traffic Act states that a policy...
must insure such person, persons or classes of persons as may be specified in the policy in respect of any liability which may be incurred by him or them in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road or other public place in
Alistair Kinley is director of policy and government affairs at risk and insurance law business BLM