A report has estimated Australian insured motorists are paying an extra $1.3 billion a year, or $45 each, because of high numbers of uninsured vehicles on roads in Australia.
The report, released by the Brotherhood of St Laurence (BSL), said insured motorists are paying more to cover the risk of loss from accidents caused by uninsured motorists – largely low-income Australians.
The report aims to shine light on the current system and develop ways to improve it, with BSL Financial Inclusion Senior Manager Tony Robinson saying Australians need to rethink motor insurance.
“Many can’t afford to insure their vehicles yet are dependent on them for daily living, particularly in outer suburban and regional areas where housing costs less but public transport is scarce or non-existent,” Robinson said.
“Accidents can incur repair costs that are financially crippling – for insured cars the average insurance claim is $3,000.
“The owners of those 2.3 million uninsured vehicles in Australia risk the cost of accidents that many can’t afford.”
Steps towards a better system
In the report, the Brotherhood said while actions need to be taken to improve the system, mandatory compulsory insurance is not the answer, with low socioeconomic families falling further behind.
BSL recommended insurers take a number of steps to lower premiums and improve the system, including:
An awareness campaign about the lack of cover CTP has;
For state governments to consider removing stamp duty from vehicle insurance policies to make them more affordable; and
Standardising the Uninsured Motorist Extension (UME) across third party property insurance policies, which provides some protection if the driver’s vehicle is damaged by an uninsured motorist who is unable to pay.
CTP confusion
The report also highlighted 21% of vehicle owners with basic compulsory third party insurance coverage believed they were covered against damage caused by an uninsured driver, with more believing they were automatically covered for CTP through their car registration.