UK Insurance Listed

One in Five Drivers Uninsured Due to Expensive Car Insurance Quotes

Recent research from one of the big price comparison sites has found that 20 per cent of motorists have driven without insurance this year. The rise in uninsured drivers is up by a third from the levels recorded in 2008, which means more people are turning away from the law and instead opting to drive illegally without the protection of vehicle insurance.

Although 62 per cent of the poll’s respondents felt that motorists who drive without insurance should be threatened with harsher punishments, increasing the severity of motoring penalties may not be the way forward to solving the problem of uninsured drivers. Understanding the reason behind the problem can often lead to finding an effective solution.

The largest demographic of uninsured drivers are young drivers. When young and newly qualified motorists apply for car insurance quotes, they can be discouraged to find exorbitant insurance fees, pushing them to not bother with insurance at all.

With premiums on some car insurance quotes running to thousands of pounds, getting a vehicle insured can be a step too far for many young drivers with limited finances. Some insurers have started offering car insurance quotes for a new “pay-as-you-drive” scheme, which has made it more affordable for young drivers in the UK to get insured. The added bonus of this initiative is that drivers are less likely to drive their cars unnecessarily.

Car insurance quotes could be made more manageable for young drivers if the Government subsidised insurance for very high premiums and a low income. 15 per cent of the survey believed Government subsidies to be a practical solution to combating uninsured drivers.

Which? insurance expert Dan Moore said: “Something clearly needs to be done to protect pedestrians and legitimate road users. Insurers should be taking the lead in encouraging consumers to buy adequate insurance”. Mr Moore believed that reducing price structures on car insurance quotes was the best way to combat the problem.

Until change comes to the insurance industry, drivers will have to console themselves with finding the cheapest car insurance quotes currently available on the market. These are most easily found by using price comparison websites in order to find the ideal insurance policy for your situation.

Car Insurance ? The Basics

Car insurance is a legal necessity in the UK, and so as every motorist has to have it, it’s important to understand how it works and what to look for in a policy. Here we look at the key components of car insurance to put you on the road to a better deal.

This should give those who are about to take driving lessons some idea as to the factors determining car insurance.

What is car insurance?

Depending on the level of cover you take out, car insurance can help drivers cover the cost of driving related damages and injuries. There are three levels of car insurance cover available:

- Third party car insurance: The minimum level of insurance, it covers liability for injury to others, including passengers; liability while towing a caravan or trailer; and damage to property.

- Third party fire and theft car insurance: The same as third party cover but with additional protection against fire damage, theft of your vehicle and damage caused by theft.

- Comprehensive car insurance: Covers everything offered by third party fire and theft but with additional cover elements that vary from insurer to insurer but typically include: loss or damage to your vehicle; accidental damage; personal effects; windscreen cover; and more.

 What influences car insurance premiums?

When you take out car insurance, insurers ask a number of questions to help identify the risk they are taking on. The higher they perceive this risk to be – i.e. the more likely you are to make a claim – then the higher your premiums are likely to be.

 This perceived risk is influenced by a number of factors including:

- The vehicle you drive – How much it’s worth; its age; repair times; damage and parts costs; body shells; performance; and security. The Association of British Insurers classifies cars into groups from 1-50 with those appearing in lower groups qualifying for cheaper premiums.

- How you plan to use the vehicle – Will you use the car for day to day driving only; for commuting; or will you use it for business or commercial travel?

- Your address – Where you live influences premiums because certain areas have higher volumes of traffic increasing the likelihood of an accident; and some areas have higher crime rates increasing the chances of theft or vandalism.

- Your circumstances – Insurers look at a driver’s claims history; whether they have driving convictions; medical conditions that may affect their ability to drive; their occupation – some jobs are higher risk, such as when someone carries goods in their vehicle; and their marital status – married drivers are generally considered more responsible.

- Mileage – The more time you spend on the road, the more likely you are to have an accident.

 - Additional drivers – Insurers will look at any named drivers on your policy. Experienced drivers with clean records may even earn discounts on a policy, but younger drivers, under the age of 25, or drivers with poor driving records are likely to increase premiums.

Why is protection against uninsured drivers important?

If you are in an accident with an uninsured driver in which they are at fault, they do not have cover in place to repair your car or pay for medical expenses. According to the Motor Insurers Bureau in 2007, there were 1.7million uninsured motorists on the UK’s roads with the AA estimating that they add around £40 to every policy bought by law-abiding road users.

What is a no-claims bonus and why is it important?

A no-claims bonus is effectively a reward for those that don’t make a claim on their policy. This discount applies on a ‘no claim’ basis and not on a ‘no blame’ basis – so if you make a claim for an accident that wasn’t your fault, it will still affect your no-claims bonus unless your insurer recovers its costs from the other driver’s provider.

 Generally for every claim you make you will lose two years’ no-claims bonus; and most policies apply a limit on their discount levels – typically around four or five years. Not only do no-claims bonuses potentially lower premiums, but they also encourage safer driving.

What is no-claims discount protection?

Once you have reached the maximum discount level you can normally pay an additional premium to protect your no-claims bonus. This means that if you make a claim you will still receive the maximum discount on the policy – although there is a cap on the number of claims you can make before you lose this protection.

Crucially, don’t assume that because you have built up a no-claims discount your premiums cannot rise. The discount is taken off what you otherwise would have paid – and premiums could still increase based on other risk factors.

What is an excess?

An excess is the amount you pay towards a claim. Generally this is split into a compulsory excess – an amount set by your insurance company; and a voluntary excess – an additional amount that you choose to pay towards a claim. The voluntary excess should always be set at an affordable level in case a claim is necessary.

Car Insurance, Essential Information About Excess Payments

An excess payment is the fixed contribution you must pay each time your car is repaired through your car insurance policy. Normally the payment is made directly to the accident repair garage when you collect the car. If your car is declared to be a write off, your insurance company will deduct the excess agreed on the policy from the settlement payment it makes to you.

If the accident was the other drivers fault, and this is accepted by the third party’s insurer, you’ll be able to reclaim your excess payment from the other person’s insurance company. But what if the other driver is uninsured?

All motorists know that it’s a legal requirement (under Section 143 of the 1988 Road Traffic Act) to have insurance for any damage they cause to third parties. But still many drive without insurance. An estimate of the incidence of uninsured driving in the UK is hard to come by and, for the obvious reasons, those drivers involved in breaking the law have every reason to keep quiet about it.

Calculations from the Department of Transport suggest that in the UK around 5% of vehicles are being driven without valid insurance. This group of people not only impose costs on honest motorists in the form of higher premiums, but their presence on our roads also represents a serious risk to other road users. Consequently, uninsured driving is increasingly being regarded as a major social problem.

But driving without insurance is not a victimless crime. If you have an accident with an uninsured driver and the accident wasn’t your fault, the repair costs will be paid for by the Motor Insurers’ Bureau that’s funded in its entirety by the industry, or by your insurer. Therefore, if you’re involved in an accident caused by an uninsured driver you’ll eventually get you car repaired but you’ll still have to pay the excess and there’ll be no one to reclaim your excess from.

What is a Compulsory Excess?

A compulsory excess is the minimum excess payment your insurer will accept on your insurance policy. Minimum excesses do vary according to your personal details and driving record and by insurance company. Today the average excess is around £100, but younger drivers could be faced with excesses of up to £500 – whilst more mature, experienced drivers with a good driving record, could be offered an excess of just £50.

So what is a Voluntary Excess?
In order to reduce your insurance premium, you may offer to pay a higher excess than the compulsory excess demanded by your insurance company. Your voluntary excess is the extra amount over and above the compulsory excess that you agree to pay in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by your insurer, your insurer I able to offer you a significantly lower premium.

The garage has repaired my car but it won’t release the car too me until I pay the policy excess to them. Is this right?

Yes, that is normal practice. But make sure you inspect the car when you collect it. Satisfy yourself that the repair is perfect. Then make sure you keep their receipt for your excess payment as you will need this if you’re reclaiming against a third party’s insurance. And just in case there’s a dispute, it’s a good idea to make sure the repair garage gives you a repair schedule. This will list all the repairs that were made to you car.