The Government will be forced to change Irish law to enable anyone injured in cars or vans that are not designed to carry passengers to claim compensation from the State.
The change follows a ruling yesterday by Europe's highest court, which found that a woman denied a claim following an accident in 1996 should be covered by insurance.
Elaine Farrell, who was travelling in the load space of a van when it crashed in 1996, was contesting a decision by the Motor Insurers Bureau of Ireland (MIBI) not to award her compensation.
MIBI, which provides compensation for victims of accidents involving uninsured vehicles, decided not to compensate Ms Farrell on the grounds that she was travelling in a part of the vehicle that was not designed for passengers.
Ms Farrell challenged this decision in the High Court, which asked the European Court of Justice to rule on whether Irish law was compatible with an EU directive on insuring against civil liability in respect of the use of motor vehicles. The court found in favour of Ms Farrell yesterday.
The court judgment said the EU's Third Motor Insurance Directive requires all passengers to be covered by motor insurance. Irish legislation, which precludes those not travelling in a part of a vehicle designed to carry passengers, is therefore incompatible with European community law. But the court said national law should retain the competence to decide the level of compensation awards made to victims of motor vehicle accidents.
The decision is likely to force the Government to change its legislation to enable any passenger injured while travelling in an uninsured motor car or a part of a vehicle to claim compensation from the State.
The Government, which was supported in the case by the MIBI, had argued to the court that insurance should not be extended to people engaged in deliberately dangerous activities.
It said its approach was consistent with domestic legislation on road safety since "the inclusion of such persons within the scope of the compulsory insurance indemnity would be tantamount to requiring insurers to underwrite conduct that was deliberately dangerous".
It also argued that states retain the right to define what constitutes a passenger under the directive and that it did not mean compulsory insurance should be automatically extended in respect of personal injuries suffered by persons travelling in a part of the vehicle not designed for seating.