Clarity for insurers - Landmark judgment regarding the scope of motor insurance handed down by the Supreme Court
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A judgment of the Supreme Court has clarified the scope of compulsory motor insurance under the Road Traffic Acts in respect of personal injury caused to an employee arising from the use of a vehicle on his employer’s behalf in the course of its business. The judgement was delivered today in a successful appeal by RSA Insurance Ireland DAC in legal proceedings arising from a dispute with Zurich Insurance plc concerning the delineation of their respective liabilities as insurers of a recycling company, Urban and Rural Recycling Limited.
An employee of the recycling company was seriously injured in an accident that occurred when a bin containing glass bottles fell from a height and struck him during a loading operation on the company’s recycling truck, which was parked on the roadside. The company held both a policy of employer’s liability insurance underwritten by RSA and a policy of road traffic insurance underwritten by Zurich. The company’s policy of employer’s liability insurance contained an exclusion for liability required to be covered by compulsory motor insurance under the Road Traffic Acts. The Supreme Court was therefore required to consider whether the compulsory motor insurance the company had in place in compliance with section 56(1)(a) of the Road Traffic Act 1961 extended to cover the liability of the company for the accident of the type that happened to its employee in this case.
The questions of law considered by Supreme Court in the appeal were each determined in favour of RSA in the appeal, with the Supreme Court deciding that the liability of the company to its employee arising from the accident during the loading of the recycling truck was a liability that required to be covered by compulsory motor insurance under the Road Traffic Acts. The outcome of the case, confirming that compulsory motor insurance is in principle required to cover an accident of this nature, is welcome development for employees, in particular where, unlike road traffic insurance, employer’s liability insurance is not compulsory under Irish or EU law.
The Supreme Court cautioned, however, that there were significant issues concerning the extent to which the section 56 of the Road Traffic Act 1961 faithfully implement Ireland’s obligations under the Motor Insurance Directives, and considered it appropriate to highlight that, if the Irish legislation did not fully align EU law, the effect may be to expose the taxpayer to the cost of compensating the victim of an accident in circumstances where that responsibility should more properly be borne by a road traffic insurer.
RSA was represented by Marianne Lonergan Partner, RDJ LLP; Michael McDowell SC, Una Tighe SC, Paul Fogarty BL and Shauna Keniry BL.