Car cover could become compulsory

The Government is considering making third-party car insurance compulsory for all drivers, following a spate of crashes involving boy racers.

The insurance industry is divided on whether the move would lead to higher premiums for ordinary drivers, and some experts warn it could lead to more unregistered and unwarranted vehicles on the road.

About 40 per cent of drivers have no insurance at all.

The Government review follows a campaign co-ordinated by the Christchurch City Council, which sought support for the introduction of mandatory insurance, an objective test for vehicle noise emissions, and more rigorous enforcement of current laws targeting street racers.

Some experts say the move would force insurance companies to cover high-risk drivers, leading them to raise premiums for ordinary drivers.

But others maintain it would lead to lower premiums for most drivers whose insurance companies would no longer have to charge them for damage caused by uninsured drivers.

Minister for Transport Safety Harry Duynhoven said that the Government would initiate a new review later in the year looking at making third-party insurance compulsory as part of a wider approach to dealing with the nation's driving problems, including boy racers.

The Ministry of Transport had also contracted an acoustical consultant to investigate methods that could be used to objectively measure noise.

Mr Duynhoven, who personally supports compulsory insurance, said overseas experience indicated that mandatory insurance could discourage young drivers from buying high-performance cars because of prohibitive insurance premiums.

"Instead of your boy racers having twin-turbo, inter-cooled, lowered blah blah, they wind up beginning their driving careers with a much more modest car," he said.

"When we've seen a 50 per cent increase in the number of young drivers over the last decade, and a huge increase in the number of crashes involving young people, then you've got to say 'we've got to do something about it'," Mr Duynhoven said.

In 1994, Parliament's transport select committee rejected a push to make insurance mandatory for all vehicles.

The Insurance Council estimates about 45 per cent of drivers have comprehensive insurance, 10-15 per cent have some form of third-party insurance, and 40-45 per cent have none at all.

Chief executive Chris Ryan said the Insurance Council had traditionally opposed compulsory third-party insurance because many drivers would refuse to take out policies.

But their position had softened lately out of sympathy with local authorities.

Many drivers, especially the young ones targeted by the campaign, couldn't afford the resulting "exorbitant premiums", he said.

They would still drive, and the result would be a dramatic increase in the number of unwarranted and unregistered vehicles on the road.

Three types of car insurance:

Third Party Property Damage, which covers you against the damage you cause to someone else's vehicle. This is the cheapest type of car insurance.

Third Party, Fire and Theft, which also covers damage caused to your vehicle by fire or theft.

Comprehensive, which covers accidental loss of, or damage to, your vehicle as well as damage to other people's vehicles.

- Herald on Sunday