If you’re going to set out on British roads, then you’ll need to have motor insurance. In the UK, this is a legal requirement, but even if it weren’t, having motor insurance would still be highly advisable. Insurance comes in several sorts, with third-party being the minimum.
This variety of insurance would cover you against any damage your vehicle causes to other people, properties or animals. To be fully covered, you’ll need comprehensive insurance.
Finally, there are those specialised types of insurance that cater to special needs: gap insurance, for example, will help to fill the disparity between what your insurer pays out and the value of the car and is available from companies such as Direct Gap.
Following the end of the First World War, motor cars started to attain widespread use throughout the country, and especially in city centres. At the time, safety standards were very low, and traffic laws were not yet in place to deal with the consequences of an accident.
As such, if you were involved in a collision, you could risk losing not just your life, but your livelihood, too.
The mandatory insurance policy was first introduced in the Road Traffic Act 1930, and was later revised in a 1988 act of the same name, to which we all now refer. This is broadly in line with the policy in other European countries.
To determine exactly how much is being spent and brought in by the motor insurance industry, we can look to a report published in December by the Association of British Insurers.
Over the past few years, the average premium for private motor insurance has risen slight to a peak in late 2017, before stabilising at roughly £468 per year by the end of 2019.
Going in the other direction, insurers paid on around £29 million every day, of which roughly £22 million was for personal claims and $7 million was commercial ones.
The average claim when it came to private car claims was just over three thousand pounds. If we only account for those claims which resulted from bodily injury, this average rises to more than ten thousand pounds.
The rate at which claims are accepted has remained roughly stable at 98.4% in 2017/2018, which is much the same as it was the previous year.
What did change over the same period was the underwriting profit, which rose from £258 million in 2017 to around £515 million in 2018.
It remains to be seen what impact the Covid-19 pandemic will have on the insurance industry in general, but it will doubtless be colossal. Those looking to take their vehicles off the road in preparation for a more isolated lifestyle should be aware of their responsibility to declare the car SORN.