How soaring insurance premiums are threatening the future of car clubs

Car-sharing clubs in areas of rural Scotland with little or no alternative transport are being “devastated” by insurers hiking premiums, it is claimed.

Such initiatives have been backed by the Scottish Government to help meet traffic reduction targets, but several clubs have been forced to close by soaring insurance costs.

Shared transport body CoMoUK said Car Bute shut last September, Moray Carshare was being wound up and others were at risk of closure.

Jenny Milne, creator of the Scottish Rural and Islands Transport Community, said: “At least six community car clubs in Scotland have gone or going.

“Some of the excesses are horrific, while some clubs have stayed open by agreeing to pay far higher premiums.”

Ms Milne said some clubs had bought electric cars with Scottish Government funding but had no insurance because they could not afford it. She said: “It is hitting areas hard that have no other transport.”

CoMoUK chief executive Richard Dilks said: “Community car clubs in Scotland are being devastated by the insurance crisis. Unless something changes soon, they will be wiped out.

“Existing schemes are finding it impossible to renew their existing policies, while communities who want to launch new car clubs cannot find any insurers.

“It remains baffling as to why insurers have become so reluctant to offer policies as the risks associated with these car clubs haven’t changed at all.”  Phil Leysley, manager of Moray Carshare, said insurance was a “significant” factor in its demise.

He said its annual premium per car had increased from £749 in 2018 to £3,000 this year, which he described as “somewhat extortionate”.

Moray Carshare said insurance costs was a "significant" factor in its decision to close. (Photo by Moray Carshare) | Moray Carshare

The increase was partially due to claims which the club’s insurer said had cost more than the premiums paid.

My Leysley said: “Unfortunately, it only takes one or two accidents to have a significant impact on our premium cost.

“Last year, we attempted to get car fleet insurance through a specialist car club broker but could not obtain a single quote.”

Mr Leysley said Moray Carshare had “provided a critical and essential service to many individuals and families who either cannot afford a car, used a car on an irregular basis, or replaced a second car with our service”.

Reeni Kennedy-Boyle, general manager of Fyne Futures, which ran Car Bute, told Bute website PA20: “We provided invaluable access to shared cars for people who either chose to give up their own vehicle or for whom the club provided affordable access to a car when needed for things like hospital appointments.”

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A spokesperson for the Scottish Government’s Transport Scotland agency said: “We are aware of the challenges facing car clubs in Scotland due to insurance cover no longer being available.

“This is an issue for car clubs across the UK and we are engaged with CoMoUK, which has been in discussions with a number of parties with a view to identifying a solution.”

A spokesperson for the Association of British Insurers said: “While insurers are supportive of different modes of transport and vehicle ownership, car clubs present a unique challenge wherein driver risk is difficult to measure.

“However, we understand the importance of car clubs to certain communities, and we have been discussing the situation with our members and British Insurance Brokers Association.”