Car Insurance Law

Requirements in law

It is an offence to use, cause to be used, or permit the use of a motor vehicle on a road, or other public place without third party insurance cover. Third party insurance is the only cover required by law in order to make a motor vehicle eligible to be used in a public place. Because of the ambiguity involved in wording of the law, which only terms ‘use’ and not ‘drive’, you can be guilty of an offence even if you do not drive your uninsured vehicle.

Insurance, unlike MOT, is not attached to the car, but covers the person in whose name it has been taken out in. Therefore purchase of a second-hand car requires a new insurance policy.

Penalty for use of vehicle without insurance

There is a maximum fine of £5000 and the application of 6-8 points to the driver’s licence. There is a fixed penalty system enforceable by the police of an immediate £200 fine and 6 points on the driver’s licence should the officer deem it expedient. If the fixed penalty is enforced immediately or within the suspended enforcement period of 7 days then no further action can be taken, if not, however, then further proceedings may be brought against the offender with a greater fine and disqualification possible.

Car sharing

Many insurance policies do not cover you for journeys that could be construed as commercial. In order to protect car sharers the law provides certain provisions that stops insurers from regarding such a journey as commercial and ensures that you are covered. These provisions are:

• The vehicle does not carry 8 or more passengers.
• The fare paid by the passenger, or the aggregate fares paid by passengers, does not exceed the running cost of the journey. An allowance for depreciation and wear is applicable.
• The fares, if different for different passengers, were agreed before the journey was undertaken.

Driving abroad

All UK insurance policies cover at least the minimum requirements for driving in an EU country. It is recommended that you check your individual insurance policy before you drive abroad in order to see what cover it gives you, as it may only be the minimum and for a set period of time.

Victims of uninsured drivers

All insurers must be party to the Motor Insurance Bureau (MIB); this organisation aims to compensate victims of uninsured drivers. The MIB attempts to assist victims as a normal insurer would for personal injury, damage to property and any other expenses such as hire cars or solicitors fees. However, if you are the victim of an untraced driver you are eligible to claim for personal injury only if it is reported to the police within 5 days. Claims for property damage are subject to consideration. A £300 excess applies to claims against untraced drivers, which prevents abuse of the MIB’s services.

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