Removal of uninsured drivers’ access to property damage compensation
Published 17 March 2024
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Foreword
Guy Opperman, MP
I am delighted to announce the launch of a consultation on this element of the government’s Plan for Drivers, published on 2 October 2023. This focuses on fairer insurance claims, seeking views on removing the right of uninsured drivers to claim compensation for property damage.
Uninsured drivers are a menace to law-abiding road users. It is wrong that, having broken the law by driving without insurance, they can then claim compensation for damage to their property following an accident. This is morally questionable at best, and a cost carried by all legal motorists.
When we were members of the European Union, we were obliged to allow this. Now we have left, we can determine our own course of action.
I would strongly encourage anyone with an interest to take part in this consultation and give us their views.
Guy Opperman MP
Minister for Roads and Local Transport
The issue
Section 143 of the Road Traffic Act 1988 requires (subject to limited exceptions) drivers of motor vehicles on roads and other public places in Great Britain (GB) to be in possession of third-party motor insurance covering the use of that vehicle. If a driver is at fault in an accident, victims are able to claim compensation through that driver’s insurer. Compensation can be paid to a victim to cover both personal injuries sustained by the victim, and property damage incurred by the victim (in most cases this means damage to the victim’s vehicle).
If a driver at fault in an accident is either uninsured or untraced, then the victim is entitled to claim compensation from the Motor Insurers Bureau (MIB).
The Secretary of State for Transport and the MIB are parties to the Uninsured and Untraced Drivers’ Agreements of 2015 and 2017 respectively. These detail the MIB’s obligations with regard to compensating victims of:
The agreements fulfilled our obligations under EU motor insurance law, to ensure we had a compensation fund of last resort for victims of accidents caused by untraced and uninsured drivers. The MIB holds and distributes the GB compensation fund. In order to comply with section 145 Road Traffic Act 1988, a motor insurance policy must be issued by an authorised insurer, which means that the insurer must be a member of the MIB. The MIB covers its costs by means of a levy on its members – the size of their contribution is calculated on their premium income from motor insurance.
The agreements are reviewed and updated periodically. The last review was a comprehensive one to ensure that they complied with UK and EU law, and we undertook a targeted consultation in 2013 with interested parties, such as the Association of British Insurers (ABI), the MIB, personal injury lawyers and the Law Society.
This led to the two current agreements.
The agreements had to reflect EU law. As a result of the review, it was concluded that the exclusion, in the agreements, of property damage claims by drivers of uninsured vehicles damaged by an untraced or another uninsured driver, did not comply with EU law. The effect of the exclusion was that when someone who did not insure their vehicle was involved in an accident with an untraced or uninsured vehicle, the Untraced Drivers’ Agreement of 2003 and Uninsured Drivers’ Agreement of 2015 excluded the possibility of claiming for damage to either car.
The government had no choice, therefore, but to amend the agreements, because we could not ignore EU law. If we were in breach of EU law then we could be subject to infraction proceedings by the EU Commission and have daily fines imposed, until we became compliant. As a result, the exclusion of compensation for property damage for those who do not insure their vehicles but are involved in accidents with another uninsured or untraced driver was removed in the Uninsured Drivers’ Agreement 2015 and in the new Untraced Drivers’ Agreement 2017.
Thus, based on EU law the current agreements oblige the MIB to pay victims of uninsured or untraced drivers for property damage in circumstances where the victims are uninsured themselves. It is wrong in principle that people who choose to break the law by driving without valid motor insurance are compensated in this way. It is especially problematic because of the knock-on effect on law-abiding motorists, who may have to pay more for their premiums as a result.
Proposed intervention
The government’s Plan for Drivers published on 2 October 2023 announced 30 new steps to proactively help drivers. As stated in action 20 of the plan, the government is proposing to bring back this exclusion, in respect to uninsured drivers being able to claim for property damage against the MIB.
This would mean that drivers who themselves are uninsured, would no longer be eligible to receive compensation from the MIB in circumstances where they incur property damage resulting from an accident with a negligent driver who is either uninsured or cannot be traced. We did not consult specifically on this previously, but it was referred to when we conducted a broader review of the agreements which were the subject of consultation.
This would not affect the rights of uninsured drivers to claim compensation for personal injury from the MIB, because we are only proposing to remove the right of uninsured drivers to claim for property damage.
If the change goes ahead, this exclusion will return. This is because we are now free from the constraints of EU membership.
We are undertaking a public consultation, together with targeted engagement with main stakeholders to gather views on the proposal.
Rationale and potential impacts
On public policy grounds, illegal uninsured drivers should not be able to benefit, in the same way as those driving lawfully, from the MIB’s fund of last resort. Motor insurers contribute to the MIB fund, so in turn it impacts on law abiding premium-paying motorists who insure their vehicles. If the change was to go ahead then the MIB, and therefore its membership, the motor insurers, would no longer have to compensate drivers for damage to their own vehicle or property, when they are not willing to obey the law and insure that vehicle. This is if they are unfortunate enough to be the victims of an accident caused by another uninsured or an untraced driver.
As a matter of principle a change would send an important road safety message, because it might further discourage uninsured driving by removing a current benefit that uninsured drivers can receive.
There is a good reason to exclude those who are not insured from benefitting from the MIB funds for their property damage. However, we recognise that the proposal represents the removal of an existing right to claim. This could be regarded as a fundamental change in that respect, and we would, therefore, want to hear the views of people who have concerns about the proposal and its likely effects.
Questions
Question 1. Should we exclude property damage compensation for uninsured drivers who are victims of accidents with other uninsured drivers, or untraced drivers?
Question 2. Please explain the reasons for your answer to question 1 above?
Question 3. If we remove the requirement for the MIB to compensate uninsured drivers for property damage, are there any unintended consequences we should be aware of?
Question 4. If, yes, please explain your answer.
How to respond
The consultation began on 17 March 2024 and will run until 12 May 2024. Make sure that your response reaches us before the closing date.
The easiest way to respond is via the online questionnaire. You can find a link to the questionnaire in the Ways to respond section of the GOV.UK home page for this consultation.
If you can’t respond online, there is also a downloadable form plus an email and postal address.
When responding, state whether you are responding as an individual or representing the views of an organisation. If responding on behalf of a larger organisation, make it clear who the organisation represents and, where applicable, how the views of members were assembled.
What will happen next
A summary of responses, including the next steps, will be published on GOV.UK. Paper copies will be available on request.
If you have questions about his consultation, contact:
Roads Policing, Insurance and Enforcement Team
Road Safety Division
Zone 3/09, Department for Transport
Great Minster House
33 Horseferry Road
London SW1P 4DR
Freedom of Information
Information provided in response to this consultation, including personal information, may be subject to publication or disclosure in accordance with the Freedom of Information Act 2000 (FOIA) or the Environmental Information Regulations 2004.
If you want information that you provide to be treated as confidential, be aware that, under the FOIA, there is a statutory Code of Practice with which public authorities must comply and which deals, among other things, with obligations of confidence.
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The Department for Transport (DfT) will process your personal data in accordance with the Data Protection Act (DPA) and in the majority of circumstances this will mean that your personal data will not be disclosed to third parties.
Data protection
DfT is carrying out this consultation to gather views on the policy regarding the exclusion of property damage by the MIB for uninsured drivers who are in an accident with other uninsured drivers or untraced drivers. This consultation and the processing of personal data that it entails is necessary for the exercise of our functions as a government department. If your answers contain any information that allows you to be identified DfT will, under data protection law, be the Controller for this information.
As part of this consultation, we are asking for your name and email address. This is in case we need to ask follow-up questions about any of your responses. You do not have to give us this personal information. If you do provide it we will use it only for the purpose of asking follow-up questions.
DfT’s privacy policy has more information about your rights in relation to your personal data, how to complain and how to contact the Data Protection Officer.
Your information will be kept securely and destroyed within 12 months after the consultation has been completed.