7 hours ago
EU rules that push up car insurance to be scrapped in Brexit bonus
EU rules that force law-abiding British motorists to stump up for compensation claims made by uninsured drivers will be scrapped by ministers.
Heidi Alexander, the Transport Secretary, will use Brexit powers to rip up the Brussels regulations and return to a 'common-sense' approach.
The UK was forced to apply the law by Eurocrats, despite ministers branding it 'morally questionable' and warning it rewarded criminal behaviour.
Car insurance firms pay into a pot, known as the fund of last resort, which pays out to drivers who have been hit by an uninsured or unidentified driver.
The cash pot means that, where costs cannot be reclaimed from the driver at fault, victims of crashes are still compensated for damage to their vehicle.
Originally, the fund was not open to claims from uninsured drivers, but in 2017, ministers were warned that their exclusion was illegal under EU rules.
As a result, the Government said it 'had no choice' but to change the law or run the risk of facing limitless daily fines from the EU Commission.
Since then, uninsured drivers who are either hit by another uninsured motorist or involved in a hit-and-run have been eligible for compensation.
The money for the fund of last resort is raised by a levy on insurance firms, which pass the cost onto their customers in higher premiums.
A Government source told The Telegraph: 'We are reintroducing the exclusion of property damage compensation for uninsured drivers.
'Uninsured drivers should not be able to benefit in the same way as those driving lawfully.
'The Transport Secretary will restore this common-sense agreement because this Labour government is tackling criminal behaviour and backing all road users to the hilt.'
Plans to repeal the EU law were drawn up by the last Tory government, which launched a consultation just before Rishi Sunak called the general election.
At the time, Guy Opperman, the then roads minister, said the EU rule was '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,' he said.
It has now been picked up by Labour, which will introduce the change.
The feedback showed there was 'overwhelming support' for changing the rules to demonstrate that 'uninsured driving is unacceptable'.
'The vast majority of law-abiding motorists pay for claims from uninsured drivers for property damage through their motor insurance premiums,' the Government said.
'Removing this right for uninsured drivers demonstrates that the government is focused on tackling criminal behaviour and sensitive to regulations that impact negatively on the general public.
'It will send a message that uninsured drivers should not benefit from being compensated by the fund of last resort for property damage.'
The Motor Insurers' Bureau, which oversees the fund of last resort, said it had been 'working closely' with ministers to reintroduce the exclusion.
'This will ensure uninsured drivers aren't able to claim compensation for property damage following collisions involving other uninsured or hit-and-run drivers,' it said.
'Uninsured drivers are not just breaking the law, but they make roads more dangerous and increase the cost of motor insurance for the honest majority.'
The change can be introduced quickly because it does not require new legislation.
Instead, the requirement to compensate uninsured drivers can be removed by amending agreements between Ms Alexander and the MIB.
