Hazard alert for motorists with no cover

A crackdown is coming but insured drivers can also take their own measures to bring down premiums, writes Melanie Bien

Although the cost of motor insurance can be high, the penalties for breaking the law and not taking out cover are about to become much stiffer.

Although the cost of motor insurance can be high, the penalties for breaking the law and not taking out cover are about to become much stiffer.

Last week Professor David Greenaway of the University of Nottingham presented his report to the Transport Secretary on how to crack down on un-insured motoring. Among his proposals is a recommendation that police are given the power to seize and, where appropriate, destroy vehicles driven without cover. There are also plans to link the DVLA's Vehicle Register and motor insurance databases, so police know which vehicles are uninsured.

Under Professor Greenaway's proposals, the minimum fine for uninsured driving will also be increased - although the exact amount has yet to be specified - to deter would-be evaders. Fixed penalties will be introduced for people who ignore reminders from insurers that their cover has expired.

Such changes are overdue, given that when a case comes to court, the fines usually amount to far less than the premiums would have been. What's more, an uninsured driver's chance of being caught and convicted is just 16 per cent annually, says the RAC Foundation.

"A £200 fine is no deterrent to someone who can save £300 to £500 a year and who will get away with that for up to six years," says John Lewis, director general of the British Vehicle Rental and Leasing Association. "A swingeing fine, community service or, in more extreme cases, a custodial sentence are the only options that will be effective."

All motorists are legally obliged to have third-party insurance but one in 20 - about one million people - drive without cover in the UK. A crackdown can't come soon enough: research from the Association of British Insurers reveals that motorists without cover are three times more likely to have been convicted of driving without due care and attention. They are also 10 times more likely to have been convicted of drink-driving.

These people are a scourge for law-abiding motorists who fork out hundreds of pounds each year for cover. Being hit by an uninsured driver is extremely inconvenient and expensive. If you have fully comprehensive cover, you will have to claim on your own policy to repair the damage, even though it's not your fault. You'll also have to pay an excess of a couple of hundred pounds when you make a claim.

And if you have a no-claims bonus, you will lose it. Typically, an NCB starts at around 15 per cent after a year, climbing to 60 per cent after six or more claim-free years. If you lose your NCB, it could result in a big hike in your insurance premiums the following year.

Even if you aren't hit by an uninsured driver, you still lose out as these people add an average of £30 to the annual premium of an insured motorist.

If you have only third-party cover, you can't claim on your policy; the only option is to apply to the Motor Insurers' Bureau (MIB), which compensates drivers involved in collisions with uninsured motorists. But Emma Holyer at insurer Direct Line points out that you will have to pay an excess of £300. And she adds: "Most people end up paying for the damage to be fixed themselves, make a claim and then wait up to two years to get their money."

Direct Line has just changed its rules so that customers with fully comprehensive cover will no longer lose out if they have to claim after being hit by an uninsured driver. They will keep their NCB and not be liable for any excess, either. Direct Line estimates that this will save motorists £400 per incident.

Direct Line policyholders who have only third-party cover won't be affected by this change, though, as they will be covered by the MIB.

If your motor policy is with Sainsbury's Bank, your NCB won't be affected by non-fault claims where the other driver is identified but not covered.

With claims from uninsured driving costing the industry £400m, and law-abiding motorists facing higher premiums, it's vital to scour the market when your policy is up for renewal. The difference between the cheapest and most expensive insurance providers is 52 per cent or £209 a year, reports the financial services research firm Consumer Intelligence.

It's also vital that you don't wait for the Government to take action on uninsured drivers, which should hopefully result in lower premiums. "These initiatives can often take time to implement; we'd urge drivers to act now to protect themselves," says Richard Mason, director of the price-comparison website insuresupermarket.com. "You can't do much about being hit by an uninsured driver but you can take measures to ensure you don't end up bearing the brunt."

The easiest way of doing this is to protect your no-claims bonus, advises Mr Mason. For an added premium, your NCB won't be affected even if you make two claims in a three-year period. Most insurers insist you have at least four years in NCBs to qualify for this, and that you haven't made a "fault" claim, for example for theft, in the previous 12 months.

Mr Mason estimates that protecting your NCB will increase your premiums by 6 per cent. In comparison, the cost of making a claim on your policy can add as much as 23 per cent to your premiums.

Young drivers often find it particularly hard to get affordable insurance. Professor Greenaway recommends that insurers work to make third-party cover more accessible for them, as well as increasing awareness that they are legally obliged to have insurance.

It's all too tempting for young drivers to be added to their parents' policy, as this is usually cheaper than buying standalone cover. But if they delay buying their own policy, they will be missing out in the long term.

Mr Mason adds: "By taking advantage of bonus accelerator offers - or perhaps adding a parent to their policy and downgrading to third-party insurance where possible - younger drivers will find it easier and more affordable to establish a good driving record, which they can then protect."