Millions of British drivers will be able to carry on using existing insurance policies in the EU after Brexit without the need for additional paperwork, the Government has confirmed.
The Department for Transport said the UK intended to remain part of the “Green Card-free circulation area” which will also save the need for extra checks at borders.
Britain has asked the European Commission for an introductory date for the scheme.
The department said in a statement: “We intend to remain part of the Green Card-free circulation area and meet requirements for third party motor insurance coverage.
“This would provide significant benefits to motorists and the insurance industry, enabling continuation of the existing insurance processes between the UK and the EU and removing the need for green cards and checks of insurance documents at borders.
“We have asked the European Commission to confirm an introductory date.”
A spokeswoman said confirmation by the EC was a procedural matter after the UK met conditions to be part of the circulation area, and that this was not subject to the Brexit negotiation process.
The Government statement comes a day after the Association of British Insurers (ABI) said that the department had written to it to confirm the policy.
It follows lobbying by the ABI and other industry bodies.
The British Insurance Brokers’ Association said the decision would be positive for the 2.5 million private and commercial drivers from Britain who travel in the EU every year.
Huw Evans, director general of the ABI, said: “This is good news for drivers and haulage operators who no longer face the prospect of doing reams of paperwork and paying admin charges every time they get on a ferry to Europe.
“It’s always encouraging to see common sense prevail and I look forward to the Commission concluding the formalities as soon as possible.”
The ABI said the decision meant that the UK’s status in the system would be the same as that as three other member states – Serbia, Switzerland and Andorra – where drivers can enter the EU using their domestic insurance policy and do not need additional documentations.
The same will apply to drivers and haulage operators who bring their vehicles to the UK.
Without the arrangement, Britain faced returning to a “green card” system dating back to the 1970s – using documents printed on green paper that cannot be delivered electronically.
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The ABI said this would have meant a lack of clarity over when motorists and hauliers need to tell their insurers about plans to travel overseas, as well as disruption for commercial fleets.
It would also have meant additional costs associated with providing the documents and building new IT systems to verify them, the association said.