Motor insurance claims

The EU Motor Insurance Directive of 2009 codified all previous five EU motor insurance directives, which consequently are no longer in force. The directive guarantees a better protection of third party victims of road traffic accidents, including those caused by unidentified or uninsured vehicles.

The effect of this judgement strengthens the position of the injured insured- Josette Grech

The EU directive sets out a specific exclusion clause when use of a vehicle is made by persons who do not have express or implied authorisation to do so, persons who do not hold a licence permitting them to drive the vehicle concerned, and persons who are in breach of the statutory technical requirements concerning the condition and safety of the vehicle concerned.

Two separate cases relating to the extent of insurance coverage made their way to the Court of Justice of the European Union which interpreted the exclusion clauses in particular detail.

Benjamin Wilkinson and Tracy Evans, two UK nationals, were two passengers travelling in or on vehicles which they were insured to drive, but the negligent driver of the vehicles was uninsured. Both suffered personal injury. In the first case, Wilkinson allowed his friend to drive the vehicle notwithstanding that he was under the influence of alcohol. It was established that Wilkinson permitted his friend to drive with knowledge that the driver was uninsured.

In the second case, Evans had a motorcycle that she insured under a policy that permitted her to drive the motorcycle but nobody else.  On the day of the accident, she permitted her friend to drive the motorcycle on which she travelled as pillion rider. Her friend had been insured under a policy of insurance to drive his own motorcycle but no other and was therefore uninsured. Evans gave permission to her friend to drive without giving any thought to the question whether her friend was insured or not.

The question in the conjoined cases was whether Wilkinson and Evans were obliged to repay any compensation that they received from the insurer under the UK Road Traffic Act, which permitted the insurer to recover from its insured any money paid out to the injured passengers, who in both cases happened to be the insured themselves.

The UK Court of Appeal made a preliminary reference to the Court of Justice of the European Union to obtain guidance as to whether the UK Road Traffic Act, which entitles the insurer to reclaim any monies forked out to compensate a passenger, was compatible with the EU directive, when it obliged the insurer to pay the injured insured by reason of the fact that they were passengers, only to be able to reclaim it a nanosecond later from them. Effectively this meant that the insurer would be entitled to reduce compensation to the passenger to zero.

The European Court essentially followed the Advocate General’s Opinion and ruled that the EU directive precludes national rules whose effect automatically omits the requirement that the insurer compensates a passenger who gives an uninsured driver permission to drive. EU law does not allow victims to be denied compensation even if the insured gave permission for an uninsured person to drive. The fact that the insured victim was aware that the person to whom he gave permission to drive the vehicle was not insured to do so, or that he believed the driver was insured, or whether or not he had turned his mind to that issue had no bearing on the victim’s entitlement to compensation from the insurer.

Consequently an insured who is travelling as a passenger and who is injured is to be treated as any other victim, irrespective of the fact that the victim is also the insured and that the insured permitted an uninsured driver to drive the vehicle.

The effect of this judgement strengthens the position of the injured insured.

jgrech@demarcoassociates.com

Dr Grech is an associate with Guido de Marco & Associates and heads its European law division.