Home Money Car insurance costs could fall as government plans to rip up EU rules letting uninsured drivers claim

Car insurance costs could fall as government plans to rip up EU rules letting uninsured drivers claim

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Acceleration: Car insurance costs have increased over the past two years
  • Since 2015, even a driver without insurance can claim compensation.
  • European regulations stipulate that drivers must be able to file a claim if they are hit by a car without coverage
  • The government now wants to prevent uninsured people from filing claims

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Car insurance premiums could fall as the Government considers scrapping rules that allow uninsured drivers to make claims – with innocent car owners footing the bill.

The current problem is compounded by record-high auto insurance premiums, some of which are used to pay for accidents caused by uninsured drivers.

Currently, a driver hit by an uninsured motorist can make a claim against a fund of last resort called the Motor Insurers’ Bureau (MIB).

Without the MIB, drivers hit by an uninsured car would not be able to recover their losses without taking them to court, as normally the innocent motorist would claim against the at-fault driver’s insurance.

Acceleration: Car insurance costs have increased over the past two years

Acceleration: Car insurance costs have increased over the past two years

The MIB is funded by a levy on car insurers, and the bill for uninsured driving is ultimately borne by honest car owners in the form of higher premiums.

But a strange quirk of European Union (EU) rules means that since 2015, all innocent drivers hit by an uninsured car can claim MIB – even if they are not insured themselves.

European law states that drivers hit by an uninsured motorist should be able to claim compensation.

British law – the Untraced Drivers’ Agreement of 2003 and the Uninsured Drivers’ Agreement of 2015 – prevented uninsured drivers from making a claim.

In 2015 and 2017, the government decided to change these two laws, otherwise the UK would face daily fines from the European Commission.

But this bizarre situation means drivers who buy legally required insurance end up paying higher premiums to pay motorists who try to flout the rules.

Uninsured driving is a big problem, and the MIB estimates there are 1 million motorists on UK roads without insurance.

Uninsured drivers cause more accidents than insured drivers because they are more likely to be involved in hit-and-runs and collisions.

The cost of the average car insurance premium is being increased by £53 a year to cover claims for accidents caused by uninsured drivers, according to trade body the Association for British Insurers (ABI).

For law-abiding drivers, this problem is compounded by record car insurance premiums, with the typical driver paying £627 a year for cover by the end of 2023, the ABI said.

More drivers are considering driving without insurance due to the high cost of living, according to a study by The Green Insurer, a broker, in December 2023.

The study found that 7 percent of drivers admit to driving without insurance, and 6 percent say they likely will in 2024 due to high insurance premiums.

Now the government is once again considering preventing uninsured drivers from getting compensation if they are hit by another uninsured driver, and is free to do so as the UK has left the EU.

Roads and Local Transport Minister Guy Opperman said: “Uninsured drivers pose a threat to law-abiding road users.

“It is not true that after breaking the law by driving without insurance, they can then claim compensation for damage to their property following an accident.

“This is morally questionable to say the least and represents a cost borne by all legal motorists.”

“When we were members of the European Union, we were obliged to allow this. Now that we are gone, we can determine our own course of action.

The Government is currently consulting on the issue to decide what to do next, but has said its current plan is to close this loophole and prevent uninsured drivers from claiming from the MIB.

However, uninsured drivers would only be able to claim for damage to their car and could continue to claim for personal injury caused by accidents.

Car premiums could fall if the government banned uninsured drivers from making claims.

A Department for Transport statement said: “It is wrong in principle that people who choose to break the law by driving without valid car insurance should be compensated in this way.

“This is particularly problematic because of the impact on law-abiding motorists, who may have to pay more for their premiums as a result.”

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