Imagine a world without car insurance. While some might celebrate the financial freedom and revel in saving a few hundred pounds a year, others would live in near constant fear.
The value of insurance is only ever felt when you need to make a claim. If you go through your whole life without ever having to contact your policy provider, then it can seem like a wasted investment. However, if you are involved in a collision or your vehicle is stolen, suddenly that safety net can appear to be invaluable.
But to understand where we are today, we must first go back to the beginning.
Car insurance has been available to motorists since the very early days of private ownership. There were still relatively few vehicles back at the turn of the 20th century, so there was no mandatory provision for car owners to buy insurance at that time.
However, as the roads got busier and accidents increased, the government was forced to take action. This led to the Road Traffic Act of 1930. Among the many new laws, compulsory third party insurance was introduced for the very first time.
While the makeup of insurance and the number of claims may have changed drastically over the last 80 years or so, the legal requirement has remained much the same. Of course there are also far more cars on the road today, with 28.5 million registered at the end of 2011, and average prices are rising all the time.
So what is your liability?
Without insurance you would be liable for the full cost of your own vehicle. If it was to be stolen or beyond reasonable repair, tens of thousands of pounds could be lost in an instant. While your risk lessens with more affordable vehicles, it could never be fully nullified.
Then of course there are issues with injuries and third party compensation. It would be impossible to guess what related laws may be created, but currently if you cause a crash and another party is injured, you are liable for compensation costs. Normally this would be paid by the insurance company as part of a settlement, but without insurance, no such deal would be possible.
Therefore you would be left with one of two regrettable scenarios. Firstly, victims wouldn’t be able to secure any form of compensation no matter how severe their injuries are. Alternatively, the full cost would be levied on the driver who caused the incident. Again, this could see a single incident causing a massive financial black hole for at least one of the parties involved.
What about if you crash into a barrier, sign or lamppost? It might surprise you to learn that the Highways Agency and local councils will often charge drivers who cause damage to essential roadside equipment. Skidding into a central reservation may save your life, but it could cost you thousands of pounds in repairs.
Again, without the safety net of insurance, you would be fully liable for any such claims. Alternatively, all road users would have to pay more in tax to ensure that damage is repaired each time.
Financial and Personal Protection
If insurance was optional, this would only create further problems. With some people taking a chance and others purchasing cover, there would be a clear disparity on the road making it difficult to deal with any claims. This is why uninsured drivers are such a big problem now, who foots the bill when they have a crash? More often than not, it is the millions of honest drivers that end up paying for those who are prepared to gamble.
While the government and police are cracking down on the problem, it is still estimated that over 1.2 million drivers still don’t have insurance. Indeed, last year the millionth uninsured car was seized and destroyed, proving that while tough measures are in place, some still prefer to run the gauntlet. Were this problem to increase, the price of policies would continue to rise as would the risk for all road users.
So car insurance remains as relevant today as it did back in 1930. While it is by no means the solution to all problems on the road, it does at least offer financial protection to motorists. Most would certainly hope to never find themselves in a position where it is required, but in the same regard, they are generally more than happy to be able to turn to their insurer at such times.
It is likely that there will be changes in the future; helping to eliminate insurance fraud and tackle those who continually fail to provide cover for their vehicle. But one thing that is always likely to remain the same is the legal imperative to buy a policy before jumping behind the wheel.