European Commission aims to cut cost of car insurance

Cheaper car insurance could become available under a series of proposals unveiled by the European Commission yesterday.

Cheaper car insurance could become available under a series of proposals unveiled by the European Commission yesterday.

A shake-up of laws governing the industry across Europe is designed to make it easier to switch insurance companies, with new minimum levels of compulsory "third-party" cover. The proposals also include provisions to simplify short-term car insurance.

A commission spokesman said that easier access to insurance cover to drive through member states would encourage people to buy the best-value cars from any showroom in the EU and stimulate competition in the market. EU-wide rules on car insurance, which are now three decades old, need updating because of the increase in cross-border traffic, the commission said.

"Without an improved common set of EU rules, motorists will be frustrated by insurance obstacles," said commissioner Frits Bolkestein.

The new provisions would also give compulsory cover to pedestrians and cyclists involved in car accidents. Currently some national laws offer them no cover and courts must try to establish driver liability.

The commission also wants insurers to be legally obliged to provide customers changing companies with statements of their accident records – which some consumers find difficult.

"The situation often prevents the policyholder from negotiating a more advantageous premium with the new insurer," said the commissioner.

Yesterday's proposals would also stop insurance companies from dictating to motorists how long they can keep the car in an EU country other than the one in which it is registered.

The commission said cover should be valid for the whole contract period "irrespective of stays in another member state".

Mr Bolkestein said the plans were "part of efforts to make EU citizens' rights to live, travel and work in any member state free of bothersome obstacles".