Unsure About Cheaper Car Insurance

New laws to allow the DVLA to clamp, seize and destroy uninsured cars sitting on driveways took a step closer this week after final regulations were laid in Parliament.

“Advisory letters” will be sent out towards the end of June and failure to sort out insurance will result in fines and eventually destruction of your motor if you continue to flout the law.

The government wants us all on board with its plans, and keeps highlighting how uninsured drivers add £30 to our premiums.

However, will the new regime make car insurance any cheaper?

Possibly not. Last month the Transport Select Committee published a report into the cost of motor insurance highlighting that 4% of motorists are estimated to be driving uninsured.

The Motor Insurance Bureau (MIB) told the Committee that this figure compares badly with other European countries, but it added that “driving without insurance has decreased by 20% since 2006 due to the introduction of a motor insurance database and better collaboration with police forces.”

The MIB is funded by a levy on insurers for administering a scheme whereby motorists involved in accidents with uninsured drivers can pursue claims for damages.

The Committee says that this levy increased from £39m in 1991 to £417m in 2008, and it is from this figure that the £30 extra premium is derived.

However, although the reduction by a fifth in the numbers of non-insurers in the last five years has apparently also led to a fall in the levy, it hasn’t led to a fall in our premiums.

An association of lawyers called the Motor Accident Solicitors Society told the Committee it was “surprising why insurers are not releasing money back to their policy holders through reduced motor insurance premiums.”

Uninsured driving adds to the cost of all our motor insurances, but it has not contributed to the recent steep increase in premiums; fraud and settling personal injury claims are the much bigger problems that need addressing.

So while threatening 4% of drivers with crushing their cars into a small cube could have an impact on the 23,000 injuries caused each year, we probably shouldn’t expect it to result in an insurance windfall any time soon.

More articles can be found on the Keep me on the Road transport law blog. For further information contact Anton Balkitis or Lucy Wood on 0800 046 3066 or visit Rothera Dowson’s road traffic law website if you are looking for a personal or commercial transport law solicitor.