Car Insurance

The DfT is currently considering whether the law should be changed to include cars currently registered on SORN. This is as a result of a recent EU Court ruling, that all vehicles should be insured, even if off the road. FBHVC are currently looking into the possible effect on classic car owners and will coordinate a response in the due time.

Although the UK is set to leave the EU, this may take a couple of years and the legislation may have to be acted on in the interim. The Government opened a survey to the public regarding the Motor Insurance Review, and this closes on  March 31st, 2017.

 

Below is an extract from an article, sent to all car clubs as a 'heads up' by Heritage Insurance.  It is of interest to many members of the classic car community, particularly those who may have non running cars that are stored, awaiting restoration.

 

Will the motor insurance review mean that SORN vehicles need insurance?

Currently if you aren’t using your vehicle on a road or in a public area you can make a Statuary Off Road Notification (SORN) declaration. This would mean that you’re exempt from paying Vehicle Excise Duty (VED) and having motor insurance. With the upcoming Motor Insurance Review we could see this changing, so will SORN vehicles need insurance?

After a recent EU ruling known as the ‘Vnuk Judgement’ the UK Government is reviewing the current motor insurance laws. The main aim is to make it easier for victims of a motor accident on private land to claim compensation.

Currently we’re all required to have at least third party insurance on a motor vehicle which we intend to use on roads or in public areas. This could be set to change, and we could potentially see a wider range of motor vehicles needing insurance, in a wider range of circumstances.

The Review

There are two main options being considered by the Government, the Comprehensive option and the Amended Directive option. Depending on which one is chosen will determine whether SORN vehicles need insurance.

Comprehensive Option

The Comprehensive option suggests that all motor vehicles being used for their intended purpose require at least third party cover. This option doesn’t stipulate where the vehicle is being used. So even if you’re just using your vehicle on private land, you’ll still need insurance. This would mean all SORN vehicles need insurance.

The UK Government do feel that the Comprehensive option is a bit extreme as there are many vehicles that are declared SORN and aren’t actually used at all, but simply stored and kept off the road. It is most likely that vehicles not intended for use will not require third party insurance.

Amended Directive Option

The Amended Directive Option will require third party insurance for motor vehicles being used on private land with public access. This option is unlikely to affect SORN vehicles. This is also the option which the UK Government is leaning towards.

Brexit

A recent EU ruling sparked the motor insurance review, as the EU are changing the Motor Insurance Directive (MID). The MID outlines motor insurance guidelines which member states must comply with and work into their own domestic laws. Despite the UK public voting to leave the EU in 2016, we are still a member state so our motor insurance laws still need to comply with the MID.

The EU is likely to go with the Comprehensive option, so whilst the UK is part of the EU we’ll need to comply with the changes. This could be a temporary solution as the UK Government is in favour of the Amended Directive option. So once we have left the EU the UK Government will likely revert to the Amended Directive option.

Impact

Should the law change and all SORN vehicles require insurance in future, we see three main issues which need to be taken into account:

Cost – Will the potential cost to members of the public outweigh the benefits to potential victims? There aren’t currently any statistics showing the risk SORN vehicles pose or the cost of claims from incidents so we’re insure what the cost to insure SORN vehicles will be. Either way individuals and businesses will need to account for the additional insurance cost in future.

Enforcement – The UK Government will need to decide on the penalties and how they will be enforced should there be cases of insurance fraud for SORN vehicles. Should the penalty for an uninsured SORN vehicle be the same as for a vehicle being used on a public highway? We may also see an increase in insurance fraud because of the additional costs owners have to budget for.

Road Worthiness – As the SORN vehicles have third party cover, will they be insured for use on the road? Currently vehicles declared as SORN are MOT exempt. If SORN vehicles require third party cover, will they need to pass an MOT or a road worthiness test?