EU car insurance farce: Premiums set to rise so that UNINSURED drivers can get compensation

The EU has ruled even motorists who don't have insurance should be protected
Law-abiding drivers will face an increase in bills to cover the cost
Transport Secretary Chris Grayling said he was furious at the ruling
Until the UK leaves the EU, he said he is powerless to stop it

By James Slack Political Editor For The Daily Mail ^[1]

Published: 19:55 EST, 12 January 2017 | Updated: 23:34 EST, 12 January 2017

e-mail ^[2]

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Millions of motorists face higher premiums to fund 'crazy' payouts for uninsured drivers.

The European Union ^[4] has ruled that even motorists who break the law by driving without insurance should be protected if their car is damaged.

However it means that law-abiding drivers who do pay for cover face an increase in bills to cover the cost.

The European Union has ruled that even motorists who break the law by driving without insurance should be protected if their car is damaged

Transport Secretary Chris Grayling last night said he was furious that 'hardworking drivers will foot the bill for the irresponsible actions' of criminals.

But he added that, until the UK leaves the EU, he is powerless to stop it.

The Cabinet minister, who backed the Brexit campaign, promised to return to the current rules once we have quit the bloc – when we will be free to rip up the edict.

Under current British rules, protection is given to motorists whose car is damaged by an uninsured driver. A body called the Motor Insurers' Bureau charges every insurer in the country a levy to meet the bill.

The cost – some £256million last year, or around £10 per driver – is passed on to motorists through their premiums.

Transport Secretary Chris Grayling last night said he was furious that 'hardworking drivers will foot the bill for the irresponsible actions' of criminals

However if the motorist who is the victim of the crash is also uninsured, they are exempt from receiving any compensation.

COST OF COVER HAS ALREADY GONE UP £95

Car insurance premiums have risen by £95 in a year – and many elderly drivers are paying more than ever.

The average annual premium has reached £767 and continues to surge towards the all-time high of £858 of 2011.

However, many older motorists are already paying record sums after seeing annual increases of more than 20 per cent.

The average cost for a 63-year-old is up 19 per cent over the past 12 months to £493.34, while for a 66-year-old it is up 23 per cent to £449.54. Drivers over the age of 71 have seen an increase of 11 per cent in just the last three months – 21 per cent in a year – taking their average to an all-time high of £497.21.

Amanda Stretton from Confused.com, which compiled the figures, said: 'As [average premium] prices climb, it seems only a matter of time before we're back at the £858 peak.'

James Dalton, from the Association of British Insurers, said: 'Pressure is growing on premiums. Cold-callers and ambulance-chasing lawyers are still exploiting the [claims] system, driving up costs for honest motorists.

'In addition, the Government has increased Insurance Premium Tax, and repair bills are going up as cars get more sophisticated.'

Despite the added cost, the EU has now ruled that a common system should be in place across the continent in which no driver is excluded.

The MIB will now have to collect extra cash to cover the cost – which will again be passed on to UK drivers, further hiking their premiums. The new system will start on March 1.

The Department for Transport said that, if it did not make the changes, the Government faces being fined and paying out damages to uninsured, illegal drivers itself. Mr Grayling said: 'It cannot be right that hardworking, law abiding drivers will foot the bill for the irresponsible actions of those who decide to break the law and drive without insurance.

'As a result of European law, the Government is forced to make these changes to the compensation paid out by the MIB. We are bound by our EU obligations – but we are leaving the EU and we will want to come back to this.'

Paul Ryman-Tubb, chief technical officer at the MIB, said: 'Whilst we will deal with these claims in a professional manner, the principle of using honest premium paying motorists' money to pay for the damage to an uninsured driver's car seems crazy.'

It is illegal to drive without insurance, and those caught face a £300 fine, six points on their licence and their vehicle being sold or crushed. If the case goes to court they also face a further fine.

If there is a claim for compensation after an accident involving an uninsured driver, the MIB will carry out a thorough investigation. However under the new set-up, uninsured drivers will still be reported to police – with the consequences of their law-breaking likely to outweigh any compensation.

The EU has previously made controversial rulings about insurance.

In 2012, it said that charging men and women different prices for cover was illegal under gender equality rules.

Before this, British insurers could charge different premiums as long as it could be proved that there was a link between a person's gender and their driving habits.