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BREXIT – What if there is no deal? Motor insurance

08 October

In the first of our “BREXIT – what if there is no deal?” series, we look at the implications for operators on motor insurance, by examining the relevant technical notice published in September 2018 by the DfT which sets out what it plans to put in place.

The UK has long adhered to EU motor insurance directives to ensure that insurance policies and standards are valid and adhered to within the European Economic Area. Consequently, protection is secured for victims of road traffic accidents.

A result of countries complying with these directives is what has come to be known as the Green Card-Free Circulation Area.

Green Cards
The Green Card is a certificate of insurance and stands as proof that the holder has the appropriate third part motor insurance to drive in the country to which they are heading. All certificates have the same format; they are green in colour and list the countries for which the motorist’s insurance policy is valid. Currently, this is all EEA Member States, and the countries of Andorra, Serbia and Switzerland.

By complying with the relevant EU directives, the UK has become part of the Green Card-Free Circulation Area. Within this area, draconian checks of motorist’s Green Cards have been abolished at the border of Member States.


A ‘No-Deal’ Landscape
If the UK exits the EU, without securing a deal in place to regulate motorist insurance, British access to the Green Card-Free Circulation Area (GCFA) would cease. The result being that UK motorists, personal or commercial, would have to carry a Green Card with them as proof of third-party insurance, when driving within the EU, EEA, Andorra, Serbia and/or Switzerland.

UK insurance providers will still be required to provide third-party insurance to motorists travelling to the EU, and UK motorists will not be required to purchase additional third-party insurance policy cover. You continue to hold the same insurance as you do now. However, insurers can decide to reflect the production costs of Green Cards, and handling costs, in an increase in their administration fees.

If you are a commercial operator, such as a haulage or coach business, you must ensure that each of the vehicles in your fleet has its own Green Card. There are also some countries that require separate trailer insurance as well. This would require a separate Green Card for each trailer. So, in some states, where a truck is pulling a trailer, there would need to be one Green Card for the trailer, and one Green Card for the truck.

Without a Green Card, operators and other motorists will have to purchase local insurance in the country being entered. This is known as frontier insurance. This is itself proof of third part motor insurance for UK registered vehicles.

Due to high costs and the limited availability of frontier insurance, it is advised that operators apply to their insurers to obtain a Green Card in ample time. It is the insurers that provide the Green Card and from them they are requested.
Overall, the most important lesson to take from this article is the growing need to have a Green Card, should the UK exit the EU without having negotiated a deal. If you do not have a Green Card and attempt to drive in an EU Member State or an EEA state, as well as Serbia, Andorra and/or Switzerland, you will be stopped at the border. This is because you will not carry sufficient evidence of third-party motor insurance.

With regards for commercial operators, each vehicle in your fleet must have a Green Card if you wish to enter EU Member States. If you run a haulage business, it is possible that both vehicle and trailer will need their own individual Green Cards.

Please contact a member of our regulatory team if you require any more information on 01254 828300.

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