Insurance Space

The government is taking further steps towards making third party vehicle insurance compulsory by introducing it to all New Zealand drivers.

The idea is to protect responsible motorists and deter boy racers who would struggle to pay the high premiums.

The concept has been flagged for some time and there are warnings boy racers are not the only ones who will be paying the bill.

Third party doesn’t cover one’s car’s damage; rather it covers damage you do to other cars. It costs an experienced driver with no traffic offences about a $100 a year.

But Transport Safety Minister Harry Duynhoven is seeking public feedback on the idea.

He released a discussion document on the proposal saying input will encourage discussion on the design, enforcement, and compliance costs of such a scheme.

Duynhoven says the national bill for motorists hit by uninsured drivers runs into millions.

Third party insurance costs about $100 a year for drivers with good track record, however, premiums are likely to be high for young drivers or those driving modified cars.

Its estimated uninsured motorists cost insurance companies up to $85 million a year.

“The current situation isn’t really fair on those who do pay to be insured for third party damage. In effect they subsidise the quarter or more of vehicles not insured through their premiums,” says Duynhoven.

The government believes insuring everyone will bring premiums down the Automobile Association (AA) disagrees.

“The insurance council of NZ has told the Automobile Association that if third party insurance is introduced in NZ then drivers’ insurance for their vehicles will increase,” says Simon Lambourne, AA spokesperson.

And the AA doubts it will keep boy racers off the road because those who flout the law won’t change their ways for yet another law.

Earlier this year, the insurance industry gave a cool reception to the plans.

The Insurance Council said while it supports the idea in principle there is no guarantee it will mean every accident would be covered by someone’s insurance.

CEO Chris Ryan says it will not mean the rest of us end up paying lower premiums. He says once insurance is compulsory it means even people “who drive like ratbags” become part of the insurance pool.

Ryan says another downside is the drain on police resources, making sure people comply with compulsory insurance.

Problem motorists may ignore any new rule and even simply refuse to register their vehicles.

The government says the penalties issued to those who do not get third party insurance will be similar to those who are caught driving their cars illegally. Cars will be impounded and $400 fines will be imposed.

Public consultation is still underway – at least until the 8th of August, though the government is keen to push this new legislation.

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Tags: Insurance