Why car insurance is a total farce

By farce I do not mean that insurance is a waste of time and that you should not have it. Quite the opposite; it is very useful and great for peace of mind and, because your car also involves other people, third party insurance is required by law – and quite rightly too. It can protect you from being bankrupted by vast legal claims against you following an accident so its purpose should never be underestimated.

No, the farce is how some of the business works and how many people get away with not having it at all and make the rest of us pick up the tab. Cars today are cheaper than ever, and you can pick up a perfectly decent car for £500 that will last you a while and not even be a non-starting death-trap. As a result of this our roads are more clogged than ever; but many of these cars won’t be insured at all. Perhaps we shouldn’t be surprised that when a youngster buys a car for £500, he baulks slightly when told that, as a new driver with no no-claims bonus, he faces an annual insurance bill of £2,000.

Counting the cost

When he hears that the fine for not having insurance can be as little as £200 – if he is caught at all – then you can understand (but not condone) why he might not bother to buy a policy. An estimated two million drivers on our roads do not have motor insurance, a number that is growing all the time. And it is the rest of us law-abiding drivers who end up paying for them – we foot the bill for crashes involving motorists who do not buy insurance. This uninsured drivers levy costs us £600 million a year; our annual premiums would be 6% to 10% lower if every driver bought insurance.

Worse, these illegal drivers are ten times more likely to drink drive, six times more likely to drive an unroadworthy car and three times more likely to be convicted of dangerous driving, according to the Association of British Insurers. And any of these factors - or drug-driving or fear of being detained for other offences - could make a driver more likely not to stop after an accident, the number of which has doubled in ten years in London to 16% of all accidents. So, how to fix this? At present you can own a car without being insured – you only start to break the law when you drive it.

As many – perhaps most – of those uninsured cars are on the DVLA computer, the law should cross reference this with the insurance industry’s database and find out, fairly quickly and easily, what’s insured and what isn’t. Surely a much better system than relying on the police to pull people over, especially since, as I observed recently, there aren’t so many of them about these days, so craven is the authorities' dependence on the speed camera which, needless to say, are not much use in this area.

Where have all the traffic policemen gone?

Use the parking army

But there is more. One of the central ironies of the Blair era is that by far the most ruthlessly efficient public service of all is parking enforcement – yes indeed, the one everyone cares least about. Our schools may be a total disgrace and our Home Office a shambles but woe betide you if you overstay your meter by five minutes. In London and most of our other major cities a paramilitary parking hit squad will come down on you like a ton of bricks and ticket, clamp and tow you away.

Well, how about make this gang truly useful for a change and get them to check out cars that are uninsured while they’re at it? They all carry PDAs and computers anyway and most of them now will do you for having no tax disc; so why not insurance too? They might even find themselves marginally more popular.

The poor will pay more

Another ludicrous aspect of insurance is how it gets paid for. When renewing my insurance recently my insurer kindly allowed me to pay it by monthly instalments, which for many – especially those of limited means, such as young people – is of course preferable. Well it would be were it not for an insidious scheme perpetrated by the insurance industry: outrageous interest charges. Base rates are currently 5.25%, and my insurer wanted to charge me a cool 30.3% APR to spread my payments over 12 months rather than pay all in one go. Well, thanks very much, but no thanks.

I am fortunately able to turn down such a generous offer, but many are not. As with so many things, those least able to pay have to pay the most for the same thing. Such practices should be banned, plain and simple. Since insurance is a legal necessity, the government should be promoting ways to encourage people to take out insurance; it should set a rule that for car insurance, no more than base rate plus an adequate handling fee of say two percentage points be levied for such spread-out payments.

Paying the penalty

Finally, the law needs to get serious about penalties. £200 fines are just not going to be a deterrent for those determined to get mobile and – like so many people today – seem to have no fear of the law whatsoever. And who can blame them, when seen from their standpoint? They know that the prisons are full and the government is looking for ways to release the prisoners it already has, and let alone not add new ones for ‘minor’ motoring offences like this.

A blatant disregard for the law – and for the interests of other people – are unfortunately ingrained in some people in our society and proper enforcement and penalties are needed to get the message across: car insurance may be costly, but no car insurance can – and will - land you in jail.

There are 2 million uninsured drivers on UK roads. How would you fix the car insurance crisis? What tactics do you think would work?
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Where have all the traffic policemen gone?