Motor insurers will have been relieved by the decision from the Supreme Court in R&S Pilling t/a Phoenix Engineering v UK Insurance Limited; which provides some clarity on the scope of the definition of “use” of a vehicle.
Spotlight on motor insurance cover
The spotlight has been on the scope of motor insurance since the decision in Vnuk v Zavarovalnica Triglav; a case which reached European Court of Justice in 2014. The judgment from that case outlined that Article 3(1) of the First Directive on Motor Insurance covers any use of a vehicle that is consistent with 'the normal function' of that vehicle. The case has led to significant debate about the cover required for vehicles and this included questions around whether cover was required on private property.
The recent Supreme Court judgment in the case of R&S Pilling t/a Phoenix Engineering v UK Insurance Limitedarose from an accident involving a vehicle which caught fire whilst being repaired by its owner (Mr Holden) at his employers’ workshop (Phoenix Engineering). The fire spread to his employers’ premises and also the adjacent property, causing in excess of £2 million damage.
The claim against UK Insurance Limited
Phoenix then pursued Mr Holden to the extent that he would be covered by his motor insurers UK Insurance Limited (“UKI”). UKI sought a declaration that they were not liable to indemnify Mr Holden as their policy stated, “we will cover you for your legal responsibility if you have an accident in your vehicle and you kill or injure someone [or] you damage their property or you damage their vehicle”. The claimant cross applied for a declaration that the motor policy should respond.
Did the motor policy cover the loss in these circumstances?
Under the provisions of the Road Traffic Act 1988 (“RTA”) a policy of motor insurance must provide cover “in respect of any liability which may be incurred by him… in respect of the death of or bodily injury to any person or damage to property caused by, or arising out of, the use of the vehicle on a road or other public place…”, section 145(3)(a).
There was an obvious question mark about whether the damage was caused by ‘the use of the vehicle on the road or other public place’. The vehicle was on its side being repaired when the fire broke out which is not ‘use’ in the ordinary sense and further it was not on the road or public place.
The Supreme Court interpreted the UKI policy as complying with the requirement of the section 145(3)(a) of the RTA but not with the extended cover required by the European Court of Justice. Consequently UKI succeeded in their application for a declaration that Mr Holden’s motor policy had with them did not cover the loss in this scenario.