Both motor insurance policies and Irish law will need to be reviewed following a recent judgment of the Court of Justice of the European Union (the CJEU). The judgment clarified that motor insurance policies must cover accidents on private land. Until now, Irish law only required that motor insurance policies cover the use of motor vehicles in a public place.
The case was taken by Mr Vnuk, who was injured when a tractor and trailer struck a ladder on which he was standing. As the accident happened on a private farm (and not in a public place), the insurance company argued that the insurance policy did not cover Mr Vnuk’s injuries. The insurance company’s arguments were successful in Slovenia’s lower courts on the basis of Slovenian law. Slovenia’s Supreme Court, however, asked the CJEU to decide if Slovenian law (as interpreted by the lower courts) was compatible with European Law.
The CJEU decided that European law compelled member states to ensure that compulsory insurance covered accidents that happened on private, as well as public, property. In arriving at this conclusion, the CJEU acknowledged that, when read literally, the relevant EU Directives’ provisions were not the same in the various languages in which those Directives were published. Some versions (e.g. the Spanish version) suggested that motor insurance was only compulsory in public places; other versions (e.g. the English version) suggested that there was no distinction between public and private places.
The CJEU noted that one cannot simply apply a literal interpretation of a Directive in one language to the exclusion of the other versions of that Directive. Where such a situation arises, one must look at the general scheme of the Directive and decide which interpretation best serves the Directive’s objectives.
In this case, the CJEU’s view was that one of the relevant Directives’ main objectives was to protect the victims of motor accidents. The CJEU supported this view in various ways, with apparently the most decisive factor being the way in which the Directives had evolved. Since the first Directive was passed in 1972, various amendments had been made that sought to extend, rather than restrict, the scope of compulsory motor insurance. In light of this, the CJEU decided that the Directives’ clear intention was to expand compulsory motor insurance in such a way as to ensure victims of motor accidents are protected.
The decision will impact Irish insurers and policyholders in various ways. The broader scope of compulsory motor insurance will increase the number of claims that will be made under those policies and may impact on premium pricing. The value of other insurance policies under which accidents on private land would have been covered up until now will also have to be reassessed. Reinsurance contracts will also need to be reviewed in light of the CJEU’s judgment.
In addition, the Department of Transport is understood to be considering what changes may need to be made to Irish law following the CJEU’s decision. Such changes are likely to include amendments to the Road Traffic Acts, and could result in the Motor Insurance Bureau of Ireland covering certain accidents on private land.
Contributed by: Grant Murtagh