On 21 February 2021, the Secretary of State for Transport announced that the UK government plans to remove the contested “Vnuk” law from British law, as a result of the UK leaving the EU.
The Vnuk law is the result of a decision by the European Court of Justice in a case involving a Slovenian worker who fell from a ladder that had been struck by a tractor (Damijan Vnuk v Zavarovalnica Triglav d.d. [case C-162/13]). Prior to Brexit, the UK government was considering whether to implement the Vnuk decision unamended. Under the proposed Vnuk legislation, all motorised vehicles would require third-party damage and injury insurance. This includes vehicles which did not previously require insurance such as mobility scooters, quad bikes and golf buggies. The law even extends to vehicles on private land, including ride-on lawnmowers.
According to the government’s announcement, the Vnuk rules do not need to be implemented in the UK as there are already sufficient insurance packages available to cover certain risks on private land. In addition, the financial burden which would be associated with the new law is considered disproportionate. If the EU law had been implemented in the UK, it would have resulted in an extra £2bn cost liability to the insurance industry. Therefore the announcement will no doubt be welcomed by British road-users, as these costs would likely have been passed onto them by way of sharp increases (estimated to be £50 annually) in insurance premiums.
Furthermore, the Vnuk law also posed a significant threat to the existence of the British motorsport industry which currently generates over £9bn of sales every year and employs more than 41,000 people. If implemented, the EU rules would have meant any collision during a motorsport race would be treated as a regular road traffic incident, requiring insurance. Research suggests that this would have involved considerable additional insurance costs of approximately £458m a year, potentially wiping out the UK’s motorsport industry. The government’s decision to scrap the rules will save the industry from potential collapse, securing thousands of jobs in the process and will no doubt be hailed as a significant victory by the industry, and those who have lobbied for the Vnuk law to be scrapped for many years.
Despite this positive outcome, the Vnuk law is still a threat to motorsport businesses across Europe, many of whom are suppliers to and customers of the UK motorsport industry. Those businesses risk financial collapse if their national governments implement the Vnuk law without a motorsport exemption. This would have a very serious impact on UK businesses in the supply chain. We await with interest to see if EU national governments follow the lead taken by the UK to protect the motorsport industry in what has already been a very turbulent 12 months.