New car insurance proposals to protect drivers
Right now, the law regarding car insurance is something of a patchwork across different European countries. There can be notable discrepancies in such law even between members of the European Union; however, new rules proposed by the EU could go some way towards rectifying this.
The new proposals reported by Auto Express would standardise various facets of motor insurance law across the EU. Nonetheless, their implications for the UK specifically remain not wholly clear.
Suggested rules intended to ensure “smooth functioning”
At this stage, the rules are merely proposals. The European Commission, the EU’s executive arm, is currently seeking feedback on these ideas, which include ironing out creases in how insurance histories are formatted and applied and defining minimum levels of legal cover.
However, in announcing the possible policy changes, Jyrki Katainen, the Commission’s vice-president for jobs, growth, investment and competitiveness, said they would protect the insurance sector’s “smooth functioning”. Katainen, a former Prime Minister of Finland, added that the changes would be “for the benefit of drivers and potential victims of motor vehicle accidents.”
What are the proposals?
The proposals are incorporated into what is known as the Motor Vehicle Insurance Directive, the five prongs of which unveiled by the Commission cover the following issues:
Insolvent insurers. Should an insurer become financially beleaguered in this manner, policyholders who would usually be entitled to make a claim should still be “rapidly and fully compensated”, to quote from Insurance Business UK, in the EU member state where they reside.
Claims history statements. An insurance history built up in one EU member state should be given the same acceptance and treatment in any other.
Uninsured drivers. EU countries will be empowered to further crack down on uninsured drivers. For example, these countries will be permitted to use number plate recognition systems in verifying whether cars from other member states are insured.
Minimum coverage. The minimum level of insurance legally necessary for an EU-residing driver can currently very much depend on the individual member state. However, the Directive would harmonise the minimum extents of legal coverage across the EU.
Scope. From an insurance point of view, what constitutes “normal use of a motor vehicle”? This part of the Directive aims to clarify the matter. For example, it is intended to touch upon the way that claims are managed for accidents which have occurred in agricultural settings or on private land.
How might the UK react to these proposals?
Undoubtedly the elephant in the room is the UK, given that the country is currently negotiating its exit from the EU. The country’s insurance industry already ensures monetary compensation for eligible policyholders whose insurers have gone bust.
The Mondaq website notes that the UK would need to amend its Road Traffic Act 1998 to be compliant with the Directive. The country might take this action even if it secures Brexit before the rules are enacted in EU law. This could help to lower the expense of car insurance quotes which can already be cost-effectively sourced from a UK insurance broker.