We all know that it’s a good idea to insure our home, its contents, our phones and even our health, but there’s nobody forcing us to do so. However, car insurance is a legal requirement with hefty penalties if we fail to take out a policy… but why? Why do we need to be insured to drive a vehicle on the road?
The primary purpose of car insurance is protection. It exists to protect both the financial and the medical interests of any parties involved in an accident — both the person considered ‘at fault’ and anyone else involved. Due to the nature of road accidents, paying for damage caused to another person’s vehicle or legal bills if they should sue you following an accident could amount to hundreds of thousands of pounds. This is where insurance comes in — it covers you for incidents involving other people that would cost a prohibitive amount of money if you were not insured.
Compulsory car insurance was introduced in the UK with the Road Traffic Act in 1930, and is designed to ensure that all drivers are covered for injury, death or damage while on a public road. If your vehicle is registered as SORN and either not driven or driven solely on private roads, car insurance is not a legal requirement. If you do take your vehicle on public roads, failure to insure it is a crime and can result in a hefty fine and points on your license, which could even be revoked. Ironically, you will find it more difficult to get insurance in the future if you’ve been prosecuted for failing to insure your vehicle.
There are three main types of car insurance, with third party being the minimum legal requirement — this covers damage or injury to a third party, including passengers in your vehicle, but does not cover damage to your own vehicle. Third party, fire and theft policies cover you as above with the addition of cover to your own vehicle if it is stolen or damaged by fire. A fully comprehensive policy protects your car as well as the third party’s vehicle, and a range of optional extras are often available that offer further protection. These vary from insurer to insurer so always make sure you read the small print to ensure that your cover offers adequate protection.
