Car cover costing you more because of uninsured drivers, Brotherhood of St Laurence finds

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RESPONSIBLE car owners are paying up to $45 extra annually to foot the bill for those without cover, a new report released today estimates.

It states uninsured drivers are causing tens of thousands of crashes each year and pushing up premium costs for other motorists.

A Brotherhood of St Laurence report says Australia’s optional vehicle property damage insurance system is “plainly unfair” to motorists who purchase policies. But author Tony Robinson said a compulsory scheme like that in the UK was not the solution.

“Overseas experience shows forcing people on low incomes to pay more doesn’t work,” said Mr Robinson, who is a former Victorian consumer affairs minister.

“Mandatory schemes still record significant percentages of people who don’t pay for compulsory cover. What if they are dependent on cars for work? You can’t take cars off people.”

Education about insurance cover, and reviewing government stamp duty charges to make policies more affordable, are instead recommended.

Improved and consistent uninsured motorist extension cover in basic third party property policies is also suggested.

The Pranged: The Real Cost of Optional Vehicle Insurance in Australiareport estimates insured drivers pay an additional total $1.3 billion a year to cover the risk of accidents with uninsured motorists.

This is mainly because many choose expensive comprehensive policies to best protect themselves, it argues.

Also, premiums are higher because insurers pass on unrecoverable losses from some uninsured drivers, who are unable to pay for repairs, it says.

The research assumes 11.9 per cent of vehicles in Australia are uninsured — equivalent to 2.3 million drivers.

It estimates uninsured drivers are to blame for 114,000 accidents nationwide each year.

Mr Robinson said some uninsured drivers mistakenly believed their car registration payment, which includes compulsory third party personal injury insurance, also covered property damage.

Most motorists have comprehensive insurance, which protects against damage regardless of fault.

Cheaper third party property insurance covers damage caused to other drivers’ vehicles.

Third party policies with an uninsured motorist extension also give policyholders some limited protection if an at-fault uninsured motorist damages their vehicle and is unable to pay.

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