HM Insights

A time of major change in the UK Insurance industry – Part 1: After Vnuk, is it time to insure that golf cart?

The UK Insurance industry is facing a number of significant changes both this year and in the years to come. A wide range of factors, most of which are outwith the industry's control, are coming together to pose huge challenges to those operating in, and interacting with, the industry.

The changes – be it Brexit, automated vehicles or other issues – will impact on consumer and insurer alike. It won't all happen at once, but it will happen and what the future will look like is at this point uncertain.

In this, the first in a series of articles on the changes affecting the insurance market, Partner and Head of Insurance Elizabeth Mitchell and solicitor Laura McCallum look at a recent decision from the EU which will have huge ramifications for insurance policies, bringing a whole range of motor vehicles within the realm of those that must be insured – and victims of more types of accident able to claim compensation.

Golf Cart Insurance Motor Lawyer Solicitor Scotland Personal Injury Road Accident Compensation Vnuk

Extension of mandatory motor insurance - the Vnuk case

The first big issue facing the industry has its roots in a farm in Slovenia more than a decade ago.

The result is that mandatory motor insurance may have to cover any motor vehicle in its normal use, in any location – ie. not just on roads but also private properties such as farms.

Mr Vnuk was loading hay bales into a barn. Whilst doing so, he was knocked off his ladder by a farmyard trailer that was attached to a tractor, whilst it was reversing. Mr Vnuk was injured as a result of the fall and pursued damages against the insurer of the tractor. The insurer refused to deal with the claim on the basis that they only provided indemnity for the tractor when it was being used as a vehicle (travelling from A-B on a road), not when it was being used as a propulsion device (like a tractor carrying out farm-work).

Mr Vnuk, raised an action in the Slovenian Courts. When the case was heard at first instance, the decision went against Mr Vnuk. The Court agreed with the defender that the insurance policy only covered accidents when the tractor was being used as a means of transport and not when damage was caused when the tractor is used as a machine or propulsion device.

The case was appealed by Mr Vnuk and almost 10 years later, it was referred to the Court of Justice of the European Union (CJEU) to decide whether the circumstances of the accident fell under Article 3(1) of the European Union's First Directive of Motor Insurance (72/166/EC).

The CJEU held that the duty to insure did indeed extend to Mr Vnuk's accident circumstances and he was successful in his claim. The Court stated that mandatory motor insurance (as per the EU Directive) must cover any motor vehicle in its normal use, in any location.

What are the ramifications for UK insurance?

The UK Government is currently holding a consultation in relation to the consequences of the Vnuk judgement which could potentially require more people having to purchase insurance policies but also more victims being able to claim compensation.

The consultation is in relation to changing UK domestic motor insurance law which is currently covered by the Road Traffic Act 1988 under Part VI – a piece of legislation that is now in direct contradiction to the Vnuk judgement and the EU Directive.

Currently, under UK law, the duty to insure your vehicle only extends to use of a motor vehicle on a road or other public place. The type of vehicle is also limited under the Act, to a mechanically propelled vehicle intended or adapted for use on a road.

It is likely, therefore, that the UK Government will require to amend the Act.

This will have far-reaching implications for insurers in relation to the types of vehicles that are legally obliged to be insured. It will also impose a duty to provide road traffic accident indemnity in circumstances where there is currently no requirement to do so.

Vehicles that may now be caught as a result of the Vnuk judgement include quad bikes, segways, lawnmowers, golf carts, fork-lift trucks, motor sport vehicles, dodgem cars etc.

Further, as the Act clashes with the EU's Directive of Motor Insurance, the UK Government may be open to compensation claims by accident victims whose claims were previously rejected by the UK Courts.


The Vnuk case has not only had ramifications for the UK insurance industry but many nations around Europe. As such, many Governments are holding consultations on the effect that the judgement will have on their insurance laws.

There is a possibility that the UK may leave the EU before any changes have to be implemented but what is clear is that any changes that do result as a consequence of Vnuk would provide greater protection for those involved in accidents caused by vehicles, whether on public or private land.

Get in touch

If you are potentially affected by the issues above, please get in touch with a member of our specialist team.