Should car insurance be made optional.

[stadler]

Here is an idea to make it fairer. Include car insurance as part of the road tax fee and charge a flat insurance component rate of £100 per year. So every person would pay just £100 a year for car insurance. This would then mean that almost everyone would be saving money. I know earlier in this thread it was said that a lot of people would pay more if we did this. But from my workings out that would not necessarily have to be the case. Most people pay more than £100 per year on car insurance so this sounds like a very fair flat price. Just make it part of the annual road tax fee and charge a £100 insurance component.

A quick search online says there are currently around 50,000,000 (fifty million) drivers in the UK. So if you times that by £100 each then you get a grand total of 5,000,000,000 (five billion) pounds each year.

I am not sure how much is paid out on third party car insurance claims each year but i very highly doubt it is more than five billion pounds. So i would think that five billion pounds would easily cover all third party car insurance payouts and there would probably still be some leftover money for profits and admin costs and whatever else.

 

[Llanigraham]

Another thing that people waste money on is travel insurance. I have travelled to over 100 countries now and almost never bothered purchasing it. The only occasion i have are the few countries that require it to enter or get a visa. But with 99% of places i go i have never had travel insurance. I know people say what if you have a medical issue in somewhere like the USA, but again why worry about something that is so unlikely.

Two examples from people I know:
Family at Disney World, youngest child slips and breaks their wrist. Final bill from the US hospital was over £25,000!
Friends on holiday in South Africa. Wife had a stroke (she was not 60 years old). Medical bill and repatriation costs were over £50,000.
How could those costs be paid if there was no insurance?
Could you afford to pay them?

 

[66701GBRF]

I am not sure how much is paid out on third party car insurance claims each year but i very highly doubt it is more than five billion pounds. So i would think that five billion pounds would easily cover all third party car insurance payouts and there would probably still be some leftover money for profits and admin costs and whatever else.

Then you would be wrong. The car insurance industry paid out nearly £10B last year.

UK car insurance market statistics 2023​

The latest UK car insurance statistics from Global Data found that the private motor industry insurance market issued over £14.7 billion in gross written premiums (GWP) in 2023. This is expected to rise by a further 3% each year through to 2026.

Motor insurance statistics from the AIB show that insurers paid out a total of £9.9 billion in 2023 to cover claims associated with car insurance. This included theft, vehicle repairs, cover cars, as well as accounting for personal injury. This represented an 18% upswing compared to the previous year, and was the highest figure since 2013.

Added to this, the cost of vehicle repairs in 2023 is the highest since records began, hitting £6.6 billion across the year. Rising by almost a third (31%) between the start of 2022 and 2023, with vehicle repair costs increasing by £1.4 billion.

Payouts for vehicle thefts have also increased to £669 million throughout 2023, which is almost a quarter (23%) more than in 2022.

https://www.uswitch.com/car-insuran...ted to rise,as accounting for personal injury.

 

[stadler]

Then you would be wrong. The car insurance industry paid out nearly £10B last year.


https://www.uswitch.com/car-insurance/car-insurance-statistics/#:~:text=This is expected to rise,as accounting for personal injury.

Oh wow that is much much much higher than i could have expected. That is a crazy amount. I would have guessed one billion at the very most. Are there really that many serious accidents on our roads.

Although that figure of almost ten billion seems to be the total car insurance claims. Not just third party insurance claims. I would be interested to know how much of that is third party insurance claims. I reckon a large percentage might be personal claims.

 

[Bald Rick]

Here is an idea to make it fairer. Include car insurance as part of the road tax fee and charge a flat insurance component rate of £100 per year. So every person would pay just £100 a year for car insurance. This would then mean that almost everyone would be saving money. I know earlier in this thread it was said that a lot of people would pay more if we did this. But from my workings out that would not necessarily have to be the case. Most people pay more than £100 per year on car insurance so this sounds like a very fair flat price. Just make it part of the annual road tax fee and charge a £100 insurance component.

A quick search online says there are currently around 50,000,000 (fifty million) drivers in the UK. So if you times that by £100 each then you get a grand total of 5,000,000,000 (five billion) pounds each year.

I am not sure how much is paid out on third party car insurance claims each year but i very highly doubt it is more than five billion pounds. So i would think that five billion pounds would easily cover all third party car insurance payouts and there would probably still be some leftover money for profits and admin costs and whatever else.

There might be 50 million drivers in the country, but there aren‘t 50 million insurance policies nor 50 million vehicles that pay car tax.

 

[signed]

Are there really that many serious accidents on our roads.

Yes, from the last 2023 statistics from the UK Gov :

https://assets.publishing.service.gov.uk/media/66f44bd130536cb927482733/ras0101.ods

From 104 258 collisions recorded (many are probably not recorded), around 25% (26839) lead to injury and 1% of them are fatal

Those collisions involve 189815 vehicles, so that a lot of vehicles for which insurance companies must pay

 

[notverydeep]

The insurance industry does not just pay out its income on claims of course, it employs tens of thousands of people to manage and administer claims and the writing of new policies, and people to tackle fraud. Other people are contracted to assess claims, for example a claim for injury will require a doctor to evaluate the injury separate from any NHS treatment. They will get a fee for each of these assessments. Then there will be court costs, buildings and facilities, pension contributions for staff and employer's national insurance - they may even pay some Corporation Tax.

Don't get me wrong, I would imagine that the industry will aim for a 15% profit on their policies and may well use those who are price inelastic (in this case people who tend to renew automatically without looking for a better deal each year) to cross subsidise new policies from low risk groups - they do exist to make profits. It is possible that if nationalised (at least the administration and billing functions), these overheads could be reduced by efficiency gains and the profit margin not being required. However if the assessment of claims gets simplified, it is likely that lower risk drivers will pay more as they are sifted from higher risk categories to a lesser extent.

Take 15% off of £14.7 billion and divide by the roughly 32,000,000 cars and we get to around £390 per car. It will be a bit less than that as some will be paid to policy holders for their own damage under comprehensive policies, but personal injury payouts to those at fault tend to be quite low as @ainsworth74 notes in his post earlier: https://www.railforums.co.uk/thread...e-be-made-optional.277255/page-2#post-7043941. And then many (even if not the OP) will want the benefits for comprehensive insurance, which will now have to be handled separately and without the economies of scale implied by being in the same policy as third party liability.

 

[Ediswan]

The car insurance industry paid out nearly £10B last year.

Do we know what proportion of that is third party claims ? That is what the compulsory element of insurance covers. 'Comprehensive' insurance is already optional.

 

[ainsworth74]

Don't get me wrong, I would imagine that the industry will aim for a 15% profit on their policies and may well use those who are price inelastic (in this case people who tend to renew automatically without looking for a better deal each year) to cross subsidise new policies from low risk groups - they do exist to make profits.

I've been in that category the last few years (not shopping around) but that's been because my premium has been going down year on year! I went through a few years where it was falling (when I first started driving), it eventually plateaued after a few years and then at renewal time my insurer would put the premium up so I'd shop around a switch. But the last few years it's started creeping down again so I've stopped shopping around seeing as it's getting cheaper again

 

[greyman42]

It could be optional for you. But having no insurance would be totally irresponsible. Plus, what would you say to the police if they pulled you over and discovered you didn't have insurance? What do you think the police would do?

The police would not do anything if it was optional.

 

[blueberry11]

I'm surprised how the vast majority of New Hampshire drivers are insured, despite no requirement for car insurance.

States With No Auto Insurance Requirement

New Hampshire is the only state where car insurance isn't mandatory. Most states require insurance to avoid fines, except New Hampshire.

www.autoinsurance.com

Interestingly, even though New Hampshire doesn’t require auto insurance, it has one of the lowest rates of uninsured motorists in the country. The states with the lowest rates of uninsured motorists are:

• Wyoming (5.9 percent)
• Maine (6.2 percent)
• Idaho (6.2 percent)
• Utah (7.3 percent)
• New Hampshire (7.8 percent)

Additionally, Virginia was the only other exception to car insurance where they had to pay a fee instead of insurance, but that was only scrapped in July 2024, leaving NH as being the only state where its optional. And NH only has 1.4 million people according to Wikipedia.

 

[66701GBRF]

I'm surprised how the vast majority of New Hampshire drivers are insured, despite no requirement for car insurance.

States With No Auto Insurance Requirement

New Hampshire is the only state where car insurance isn't mandatory. Most states require insurance to avoid fines, except New Hampshire.

www.autoinsurance.com

Additionally, Virginia was the only other exception to car insurance where they had to pay a fee instead of insurance, but that was only scrapped in July 2024, leaving NH as being the only state where its optional. And NH only has 1.4 million people according to Wikipedia.

Surely without insurance the alternative is being sued or having to sue?

 

[Wolfie]

Surely without insurance the alternative is being sued or having to sue?

See lots of episodes of Judge Judy....

 

[Meerkat]

Two examples from people I know:
Family at Disney World, youngest child slips and breaks their wrist. Final bill from the US hospital was over £25,000!
Friends on holiday in South Africa. Wife had a stroke (she was not 60 years old). Medical bill and repatriation costs were over £50,000.
How could those costs be paid if there was no insurance?
Could you afford to pay them?

But then the person with no insurance expects the government to rescue them, or bleats on social media and expects people to chip in to a fundraiser to save them from their cheapness.

Insurance is so high because modern cars write themselves off so easily, and its too easy to make claims for whiplash etc.

 

[jp4712]

Here is an idea to make it fairer. Include car insurance as part of the road tax fee and charge a flat insurance component rate of £100 per year. So every person would pay just £100 a year for car insurance. This would then mean that almost everyone would be saving money. I know earlier in this thread it was said that a lot of people would pay more if we did this. But from my workings out that would not necessarily have to be the case. Most people pay more than £100 per year on car insurance so this sounds like a very fair flat price. Just make it part of the annual road tax fee and charge a £100 insurance component.

A quick search online says there are currently around 50,000,000 (fifty million) drivers in the UK. So if you times that by £100 each then you get a grand total of 5,000,000,000 (five billion) pounds each year.

I am not sure how much is paid out on third party car insurance claims each year but i very highly doubt it is more than five billion pounds. So i would think that five billion pounds would easily cover all third party car insurance payouts and there would probably still be some leftover money for profits and admin costs and whatever else.

So, I'm a careful driver aged 48, no claims for 30 years, I live in a quiet rural area and my Ford Focus is worth about £6,000.

So, I'm 27 and I've had three accidents in five years, I own a Lamborghini worth £100,000 and I live in central London.

Do you see what the problem is here with a flat fee?

 

[Ediswan]

So, I'm a careful driver aged 48, no claims for 30 years, I live in a quiet rural area and my Ford Focus is worth about £6,000.

So, I'm 27 and I've had three accidents in five years, I own a Lamborghini worth £100,000 and I live in central London.

Do you see what the problem is here with a flat fee?

I don't believe anybody is suggesting a flat fee for covering the driver's own vehicle.

 

[dcbwhaley]

So, I'm a careful driver aged 48, no claims for 30 years, I live in a quiet rural area and my Ford Focus is worth about £6,000.

So, I'm 27 and I've had three accidents in five years, I own a Lamborghini worth £100,000 and I live in central London.

Are you schizophrenic?

I am puzzled why living in central London should push up the premium.

I payed a high premium in central Manchester where my car syaed in the garage all week as I wcycled to work.
The premium fell when I moved out of town and took to commuting twenty miles by car.

 

[signed]

I am puzzled why living in central London should push up the premium.

The issue is the risk of stealing if you hold a insurance that cover that

Not the UK, but my premium almost double from ~€500 to ~€1000 if I lived in Paris compared to where I am now

 

[Bald Rick]

I am puzzled why living in central London should push up the premium.

Because the rate of claims varies around the country, due to differing rates of ‘accidents’, theft, and the value of cars you might have an accident with.

 

[philthetube]

Surely it could be done by the government. Instead of using private insurance companies it would just be the government providing it.

I am not sure how New Zealand does it. But it might be worth looking at how they do it there and copying whatever the do.

Insurance, called by any other name is still insurance.

 

[mpthomson]

I believe that if you can post a bond for a large sum of money, thus proving you could meet damages oyt of you own pocket, you are not obliged to have insurance cover.

And operators of large fleets of vehicles are allowed to cover themselves.

Not any more, you haven't been able to do it as an individual for decades and the scheme for businesses was closed to new entrants in 2019. When it was looked into it was discovered that many of the organisations that do or did put in their £500k didn't actually have the capital to pay the often much higher claims resulting from serious injury (easily into the millions sometimes)/ damage to property etc.

Large fleets followed the same process ie posting a bond. The only exceptions where that didn't happen are those fleets considered 'Crown', so military green fleet, police, ambulance etc

 

[Tetchytyke]

Insurance is so high because modern cars write themselves off so easily, and its too easy to make claims for whiplash etc.

Insurance is so high because the various hangers-on in the insurance industry inflate their costs throughout the process. And, ultimately, we all pay for those inflated costs.

A few years ago my Fiesta had a minor bump after someone had failed to engage their handbrake properly on a hill. It needed a new front bumper, nothing more. But the insurance company took the car away and gave me a huge SUV as a courtesy car and then took weeks on end to fix my car. I think I had the hire car for over two months in the end. That can't have been cheap. All to fix a broken plastic bumper. The bodyshop I normally used would have fixed it that afternoon.

As for the personal injury claims, as soon as the accident happened I had four different claims management companies contact me about my accident on that date. They'd obviously had my details sold to them by someone in the chain. I had a long conversation with one of them to tell them the car hit me and cut my head off; they didn't appreciate the humour, funnily enough.

 

[miklcct]

Because the rate of claims varies around the country, due to differing rates of ‘accidents’, theft, and the value of cars you might have an accident with.

I would suggest that the only allowed criteria of pricing third party insurance would be the mileage, the licence age, the number and the nature of at-fault accidents you made in the past.

For example, everyone, no matter how old you are, where you live, where and why you drive you car, etc, you should pay the same amount of insurance as others as long as your mileage is same, your at-fault accident rate is the same and your licence age is the same.

It is unfair that you have to pay more just because you live in a certain area that most people are driving more expensive cars (others' fault), or because the roads are more dangerous (the Government's fault).

 

[Bald Rick]

I would suggest that the only allowed criteria of pricing third party insurance would be the mileage, the licence age, the number and the nature of at-fault accidents you made in the past.

You can suggest what you like, but that’s not how the real world is.

It is unfair that you have to pay more just because you live in a certain area that most people are driving more expensive cars (others' fault), or because the roads are more dangerous (the Government's fault).

Well, no one is forcing you to live there. You could live in an area with cheaper car insurance rates. Is it also unfair that if you live in a certain area that council tax is more expensive, or dental treatment, or plumbing work, or train tickets, or the price of a pint?

 

[pitdiver]

Travel insurance was mentioned earlier. I'm all for that. My son whilst on holiday this year in Turkey inexplicably died. Had he not arranged travel insurance it would have cost between £6k-£8k to have his body repatriated plus the cost of transporting him from Manchester Airport back to Luton where the family undertakers were based. Plus the legal fees in Turkey.
Travel insurance paid for it all.

 

[miklcct]

Well, no one is forcing you to live there. You could live in an area with cheaper car insurance rates. Is it also unfair that if you live in a certain area that council tax is more expensive, or dental treatment, or plumbing work, or train tickets, or the price of a pint?

Yes, especially council tax and train tickets. These should all be set at a fixed rate by the Government to be the same nationally to eliminate postcode lottery.

For the price of pint, not really. Different pubs can have a different price of pint.

 

[Bletchleyite]

Yes, especially council tax and train tickets. These should all be set at a fixed rate by the Government to be the same nationally to eliminate postcode lottery.

Salaries too?

 

[Wolfie]

Yes, especially council tax and train tickets. These should all be set at a fixed rate by the Government to be the same nationally to eliminate postcode lottery.

For the price of pint, not really. Different pubs can have a different price of pint.

Since councils and the population that their services cover and hence the demands are far from the same then why exactly should Council tax be set nationally. If the electorate in a particular area want better services and are prepared to vote/pay for that then why should they not be able to do so?

 

[Harpo]

When that happens where it's cheaper not to have a car insurance, the business would need an industry overhaul.

We know that insurance repair costs have been forced up by all of the safety crap features mandated for current vehicles, but two measures that might help insurance costs are addressing the ease of keyless theft, and adding some means of assessing car driving standards during the 53 years that nobody currently bothers with.

 

[miklcct]

Salaries too?

Yes, the same job should earn the same everywhere in the whole country.