COMPULSORY VEHICLE INSURANCE WITHIN THE BOUNDARIES OF PORTS AND AIRPORTS

The applicable law

In 2000 the current Law[1] was enacted, prohibiting the use of a vehicle on a road unless a third-party liability insurance policy is in force. It also included the following definition:

??Road? means any road, street, square, open space as well as any place to which the public has access, and includes a bridge used in connection with any road, as well as any open space in the territory of ports and airports, except airport landing and take-off runways and aprons.

?Since the open spaces of ports and airports were considered ?roads?, compulsory third-party liability insurance applied in these areas. However, airport landing and take-off runways and aprons were not considered ?roads? and, therefore, compulsory insurance did not apply in these areas. Motor insurance policies were not supposed to cover third-party liability for accidents in such areas. Even if the extension ?off the road? was granted, take-off runways, landing strips and parking areas of airplanes were normally excluded.

?Amending Directive

?In 2021, the Amending Motor Vehicle Insurance Directive[2] was issued, imposing compulsory insurance throughout the territory of the member states.

?The Amending Directive allows certain derogations from the rule of compulsory insurance. One of them concerns restricted access areas.

?Rapporteur Dita Charanzová, Vice-President of the European Parliament, stated[3] that it was important to clarify that the term ?use of a vehicle? includes a vehicle used in traffic, both on public and private roads, but not in cases where the vehicle it is used exclusively in a closed area, with no access from the general public. If, however, such a vehicle - that is used both in closed areas as well as in traffic and consequently is obliged to have motor insurance cover - is involved in an accident in a closed area, the insurer of the vehicle should still be liable vis-à-vis injured parties.

?Recital 7 of the Amending Directive states that member states should be able to provide for limited derogations from compulsory third party insurance ?as regards restricted access areas to which unauthorized persons should not enter, such as specific locations and areas with equipment in ports and airports?.

?The new paragraph 4 of Article 5 of the Directive reads as follows:

??A Member State may derogate from Article 3 in respect of vehicles used exclusively in areas with restricted access, in accordance with national law.

Any Member States so derogating shall ensure that vehicles referred to in the first subparagraph are treated in the same way as vehicles in respect of which the insurance obligation referred to in Article 3 has not been satisfied.

The guarantee fund of the Member State in which an accident has taken place shall then have a claim against the guarantee fund in the Member State in which the vehicle is normally based.?

?Amendment of the Cyprus Law

?In the context of harmonization with the Amending Directive, as from 23.12.2023 Cyprus abolished the geographical limitation of the ?road? by an Amending Law[4] and thus compulsory insurance was extended to places where the public has no access, e.g. private areas, as well as take-off runways, landing strips and parking areas of airplanes.

?The amendment of the Law did not affect the insurance policies of registered vehicles entering ports (e.g. cars of port staff, shipping companies, customs agents, suppliers, visitors, etc). The insurance policies of these vehicles continue to have to cover third party liability in relation to accidents occurring within the port boundaries.

?The amendment to the Law affected the insurance policies of registered vehicles used in airport landing and take-off runways and aprons (e.g. airline cars, official pick-up limousines, catering vehicles, cleaning vehicles). Insurance policies for these vehicles must now cover liability for bodily injury and/or property damage caused by their use in these areas.

?If the policy includes an exclusion of airport landing and take-off runways and aprons, such exclusion is void against victims.[5] As is known, if the insurer is compelled to pay a claim, it can recover the amounts paid from its insured.

?Cyprus also chose to adopt the derogation of restricted access areas. The Amending Law added a new subsection[6] which provides that the provisions on compulsory insurance do not apply in relation to:

??(g) a vehicle which is used exclusively in a limited liability area as defined in a decree of the Council of Ministers which is published in the Official Gazette of the Republic?.

?Note that the Directive refers to ?restricted access? areas and not ?limited liability? areas.

?The Law then provides[7] that in case liability arises from the use of such a vehicle and the vehicle does not have insurance coverage, the Motor Insurers’ Fund is responsible for paying the damages.

?Comments on the current regulation

?To date, the Council of Ministers has not defined restricted access areas by decree and, thus, the derogation remains inactive.

?Note that, although the Law gives the Council of Ministers the power to exempt certain types of vehicles from compulsory third-party insurance,[8] the Council has to date not taken such a decision.

?These omissions of the Council of Ministers entail compulsory third party insurance for certain vehicles, that is, for certain self-propelled vehicles moving on the ground solely by mechanical power.[9]

?Vehicles used exclusively within the limits of the ports, even if they are not registered, should have a third-party motor insurance policy. Types of such vehicles include forklifts, terminal tractors, reach stackers, empty container handlers, mobile cranes, straddle carriers.

?Vehicles that are used exclusively within the boundaries of the airports, even if they are not registered, should also have a motor insurance policy that covers third-party liability. Types of such vehicles include pushback and aircraft tags, platform stairs, maintenance platforms, ground power units, refueling vehicles, baggage tractors).

?If such vehicles remain uninsured, their owners and possibly their drivers commit an offense punishable by imprisonment or a fine as well as suspension of their driving license.[10] The claims of the victims will be covered by MIF, but whenever it pays a claim, it will be entitled to recover from the owner of the uninsured vehicle.[11]

?If the Council of Ministers designates by decree ports and airports as restricted access areas, the owners of vehicles used exclusively within their boundaries will not commit an offense if their vehicles remain uninsured.

?Similarly, if the Council of Ministers exempts certain types of vehicles from compulsory insurance, the owners of such vehicles will not commit an offense if their vehicles remain uninsured.

?In both hypothetical cases, the claims of the victims will be taken over by MIF, which will have the right to recover from the owners of these vehicles. For their protection, the owners of the vehicles, could take out general liability insurance that covers their liability from the use of such vehicles.

References

[1] ?The Motor Vehicles (Third Party Insurance) Laws of 2000 to 2023

[2] ?Directive (EU) 2021/2118 of the European Parliament and of the Council of 24?November 2021 amending Directive 2009/103/EC relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability?

[3]? European Parliament – Report A8-0035/2019

[4] ?The Motor Vehicles (Third Party Insurance) Amending Law of 2023 (L.167(I)/2023)

[5] ?Section 9(e) of the Law

[6] To Section 3(2) of the Law

[7] ?Section 3 (2B)(a) of the Law

[8] ?Section 3 (2)(c) of the Law

[9] ?See definition of “vehicle” in section 2 of the Law

[10] ?Section 3 (4) of the Law

[11] ?Section 30 of the Law