FLEETS may face fines and find their insurance invalidated if they fail to keep their records updated on the Motor Insurance Database (MID), under the terms of the new EU 4th Motor Insurance Directive.

The Directive will force fleets to supply to the MID the registration details of every vehicle driven by an employee that is covered by the corporate insurance policy. Traditional 'blanket' fleet insurance policies that do not require the fleet to specify each and every vehicle will no longer be legal. The Motor Insurers' Information Centre (MIIC), said: 'Insurers are likely to make vehicle notification a condition of the policy, and hence not pay own damage claims if this is not done.'

While insurers will still be obliged to meet third party claims, if they refuse to reimburse fleets for own-damage crashes the financial fall-out would be enormous, with the potential to deal deadly blows to fleet budgets and corporate bottom lines.

A spokesperson for the Association of British Insurers was non-committal on how strictly insurance companies will apply the terms of the new Directive to fleets that fail to supply the MID with registration details of all their vehicles.

'It's too early to say, but there could be difficulties in the future for habitual offenders,' she said.

Sources within the insurance industry indicate that the new responsibility of fleets to supply all their vehicle registrations to the MID may eradicate abuse by certain fleets that previously had bought blanket insurance cover for a certain number of vehicles when in reality they were running a substantially larger fleet.

Fleets have until January 20, 2003 to supply their vehicle registration data to the MID, and Donald Martin, project manager at the MIIC, believes fleets will be allowed a certain amount of leeway to make the odd mistake.

He said it would be 'highly unlikely' for insurance companies to invalidate claims for occasional lapses. However, he also warned fleets not to be complacent, and confirmed that serial non-compliers could find insurance companies pulling the plug. Such 'serial non-compliers' could also have their details passed on to the Crown Prosecution Service.

At present, levels of fines for such offenders are being discussed and the Department for Transport will announce more details at the end of November, although present corporate motor insurance fines have a ceiling of £5,000.