The proposed Fifth Motor Insurance Directive specifies that insurance cover should remain valid for the whole term of a contract, irrespective of temporary stays of a vehicle in another European Union member state.
The EC insists that the established Second Motor Insurance Directive says the 'the compulsory insurance of a vehicle should cover, on the basis of a single premium, the entire territory of the European Union'.
The new proposal will also assist fleets that want to source their vehicles cross-border, because it will avoid the need for the purchaser to buy a costly temporary insurance policy in the country where it buys the vehicle just to cover transit to the vehicle's destination country.
'Insurers established in the member state in which the purchaser is resident would therefore be able to cover the risk during the period from its dispatch until its final registration,' says the proposal.
It also suggests that companies and private drivers could buy their insurance cross-border, so that a UK fleet could be insured by an insurer based in another member state – so long as the insurer meets specific criteria.
EC internal market commissioner Frits Bolkestein said: 'European citizens have the right to use, buy and sell their vehicles in other member states. So we need a system that makes it as easy as possible to get insurance cover, for whatever circumstances may arise. That cover needs to be effective across borders.'