This reform, published in the Official State Gazette on 24 July, constitutes a regulatory milestone in the field of compulsory motor insurance, which will be analysed by the Insurance Department of Belzuz Abogados S.L.P. as it adapts Spanish law to Directive (EU) 2021/2118 and responds to the needs of a sector undergoing technological transformation.
I. Context and Justification for the Reform
The need to adapt the Spanish insurance system to new technological and mobility realities has been recognised at both national and European level. Directive (EU) 2021/2118 of the European Parliament and of the Council of 24 November 2021 amends Directive 2009/103/EC relating to insurance against civil liability in respect of the use of motor vehicles. This amendment responds to the evolution of the vehicle fleet and the emergence of new means of transport, such as electric and autonomous vehicles, which require specific regulation to ensure legal certainty for users and protection for accident victims.
II. Main changes introduced by Law 5/2025
- Extension of the scope of application: new concept of motor vehicle
Law 5/2025 introduces a significant extension to the definition of ‘motor vehicle’ with the aim of adapting it to new forms of mobility and avoiding gaps in coverage. From now on, this concept includes all motor vehicles powered exclusively by mechanical force that are not intended to run on rails and that meet any of the following parameters: have a maximum design speed of more than 25 km/h, or a net weight of more than 25 kilograms together with a maximum design speed of more than 14 km/h.
The regulation also covers trailers and semi-trailers, whether they are towed or not, provided that they are intended for use in conjunction with the above vehicles.
A particularly important aspect of the reform is the creation of the category of light personal vehicles (VPL), which includes, among others, electric scooters and personal mobility vehicles (VMP). These vehicles, which until now were not subject to compulsory insurance, are now included in the compulsory civil liability system. The law distinguishes two groups within this category: on the one hand, vehicles weighing less than 25 kilograms and with a maximum speed of between 6 and 25 km/h; and, on the other, those weighing more than 25 kilograms, but with a maximum manufacturing speed of between 6 and 14 km/h.
This insurance obligation is scheduled to come into force on 2 January 2026, allowing a transitional period for both users and the insurance sector itself to adapt to the new regulation. In short, this amendment aims to ensure that all means of transport with the potential to generate traffic risks are covered by an insurance system, eliminating legal loopholes and strengthening the protection of victims in the event of an accident.
- New concept of Traffic Accident
Law 5/2025 introduces Article 1 bis, which redefines the term ‘traffic accident’. It shall be understood to mean:
“Any use of a motor vehicle in accordance with its function as a means of transport at the time of the accident, regardless of its characteristics, the terrain on which it is used, or whether it is moving or stationary.”
This change removes interpretative doubts that had previously given rise to legal controversy. Cases such as accidents in private spaces (farms, industrial estates, car parks), or situations in which the vehicle was stationary but fulfilling its transport function (unloading goods, agricultural work), are now unequivocally covered.
European case law, in particular the TJUE judgment of 4 September 2014, case C-162/13 (Damijan Vnuk), had already insisted on a broad and uniform interpretation of the concept of circulation. With this reform, the Spanish legislator has taken up this doctrine, aligning national law with Community law.
- Improved protection for victims
Another notable new feature is the guarantee of compensation in cases of insurer insolvency. If the vehicle that caused the accident is insured by a company domiciled in the European Economic Area (EEA) that becomes insolvent, the victim will still be protected, regardless of whether the accident occurred in Spain or in another Member State.
The aim is to strengthen users’ confidence in the system, preventing victims from suffering neglect through no fault of their own and ensuring the effectiveness of the principle of full compensation.
- Strengthening Control and Supervision
The reform also strengthens control instruments: – Electronic systems for real-time verification of insurance validity are implemented. – Insurers will be required to submit detailed and updated contract information to the Insurance Compensation Consortium. – This facilitates the immediate identification of the responsible entity in the event of an accident.
These measures seek to increase the effectiveness of the system, reduce the circulation of uninsured vehicles, and streamline claims management.
III. Practical Implications for the Insurance Sector
The implementation of Law 5/2025 poses significant challenges for insurance companies. It will be necessary to adjust internal policies and procedures to comply with the new legal requirements, including the extension of the scope of compulsory insurance and the implementation of electronic control systems. In addition, insurers will need to work closely with the competent authorities and the Insurance Compensation Consortium to ensure the effectiveness of the new legal framework.
IV. Relevant Case Law
The reform cannot be understood without reference to the case law of the Court of Justice of the European Union (TJUE), which has laid the foundations for interpretation in this area. Among the most relevant decisions are: – Case C-162/13, Damijan Vnuk: included an accident on a farm within the concept of ‘traffic’, requiring a broad interpretation. – Case C-514/16, Rodrigues de Andrade: reaffirmed that insurance must cover the use of vehicles in private spaces. – Case C-334/16, Núñez Torreiro: established that a parked vehicle can also be considered to be in circulation if it retains its transport function.
Law 5/2025 expressly adopts this doctrine, ensuring consistency with EU law and eliminating the legal uncertainty that existed in borderline cases.
V. Conclusion
Law 5/2025 represents a comprehensive reform of the civil liability and compulsory insurance system for motor vehicles.
Its main contributions are:
- Extension of the concept of insured vehicle to include PMVs.
- Redefinition of the concept of circulation, in accordance with European case law.
- Strengthening of victim protection, even in the event of insurer insolvency.
- Greater control and supervision through electronic systems.
This is a decisive step in the modernisation of the Spanish system, in line with EU regulations and new social and technological requirements.
At Belzuz Abogados S.L.P., as a law firm specialising in insurance law and civil liability, we are available to advise you on the impact of this reform, both from the perspective of insurance practice and in defending the interests of victims and policyholders.