Smash with uninsured driver calls for damage limitation

DRIVERS are at increased risk of costly accidents involving uninsured drivers as car insurance premiums continue to soar. And while the right insurance goes a long way, many drivers have discovered that when the other party isn't insured the costs can still pile up.

An estimated 1.5 million people drive without insurance in the UK, even though it's illegal to do so, with the number of uninsured drivers as high as one in four in some inner-city areas. And it is feared even more drivers could risk taking to the road without cover if car insurance premiums continue their recent rise.

Premiums are up 30 per cent since January 2009 and AA Insurance has predicted a further 20 per cent rise by the end of 2010, amounting to a huge rise over the past two years as insurers pass on the cost of a burgeoning compensation culture and an increase in fraudulent claims.

Young drivers are typically the hardest hit by higher premiums, with the biggest increases affecting the "third party fire and theft" policies typically bought by younger drivers with cheaper, older cars. The increases have sparked new fears that higher costs will mean many younger drivers may be tempted, illegally, not to insure their cars at all. And a rise in uninsured drivers inevitably increases your chances of a costly collision with one.

Currently, drivers without insurance can leave their vehicle off-road until they arrange the appropriate cover. But under the Continuous Insurance Enforcement Rules coming into force next year, drivers without insurance must either insure their car or officially declare it off-road.

Those who do neither face a fine of up to 1,000 and eventually confiscation of their car. Motorists who don't use their cars and leave them uninsured for a year or more will be able to apply for an exemption by arranging off-road storage and declaring it through the Statutory Off Road Notification (Sorn). The new rules will also see the DVLA database being combined with the Motor Insurance Database to identify drivers who do not have insurance.

To ensure you are not in danger of unwittingly driving without insurance you can use the Motor Insurance Database, at www.askmid.com, to check, free of charge, that you car is on it. The database can also be used to find out if a vehicle with which you've been in an accident is insured.

The new measures should in the long term see the levels of uninsured drivers come down again. But in the meantime high insurance costs mean the risk of accidents where at least one party is not insured continues to grow.

In insurance terms, even if you have a comprehensive policy that covers you in these instances, only a small minority of policies will protect your no-claims bonus (NCB), with the excess usually still payable. Even the tiny band of insurers that will protect your NCB - including Hiscox and Chartis - typically require the details of the uninsured party, excluding victims of untraceable hit-and-run accidents from NCB protection.

Ian Crowder of the AA explained: "With most insurers you will lose your NCB for the time being until the claim has been settled by the Motor Insurers' Bureau. It's a no-claims bonus, not a no-blame bonus, so even if it's not your fault there's still a claim, which is why you will usually lose your NCB and pay an excess too."

If you don't have sufficient insurance cover in these circumstances - and relatively few people do - there is another way to secure compensation. Claims for accidents involving uninsured drivers are usually handled by the not-for-profit Motor Insurers' Bureau (MIB), which has proved a lifeline for thousands of people affected by accidents involving uninsured drivers.

Ashton West, chief executive of the MIB, said: "It can be particularly distressing if the accident involves an uninsured driver or one that leaves the scene. Where there are injuries or debris blocking the road the matter should be reported to the police. Be particularly vigilant if the accident involves a foreign lorry and make sure that you obtain the registration details from the cab and the trailer of the vehicle."

Where claims are successful the MIB pays out the full compensation, minus an excess of 300, unless there is evidence that the claimant is partly or wholly responsible for the accident. The excess is designed to ensure the MIB system isn't clogged up with relatively trivial accident claims. It is only 175 for any cases that date back further than 1 October 1999.

Claims limited to property damage or minor injury are typically resolved within four or five months, but where there has been serious injury or the claim is complicated by contested liability or evidentiary difficulties it can take considerably longer. Claims made with the MIB also have a knock-on effect on premiums because the bureau is funded by a levy on insurers who pass on the cost of claims to their customers.

The MIB receives more than 30,000 claims a year for accidents involving uninsured or untraceable drivers. West says: "The good news is the number of claims to the Bureau is going down because the police are seizing more uninsured vehicles than ever before. However, there are still too many people prepared to drive without insurance which, apart from being socially unacceptable, is illegal."