The owners of 2.3 million uninsured vehicles in Australia risk the cost of accidents that many can’t afford, while insured motorists pay a total of $1.3 billion more for their coverage than they would if all were insured, finds a Brotherhood of St Laurence report.
“We need to rethink Australian motor insurance,” said Tony Robinson, the Financial Inclusion Senior Manager of the Brotherhood, a national anti-poverty group. “However, mandatory insurance is not the answer as it will punish poor people. This new report aims to spur public discussion on how to improve the current system, and sets out some steps towards this.”
The report, titled Pranged: the real cost of optional vehicle insurance in Australia, says the main reason motorists give for being uninsured is the cost, and that Australians on low incomes are less likely to insure their vehicles.
Mr Robinson said: “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. Yet accidents can incur repair costs that are financially crippling – for insured cars the average insurance claim is $3,000.”
The report says there is also confusion about what is included in the compulsory third party insurance paid with car registration. Some mistakenly think that it includes damage to other cars or property. However state governments mandate compulsory third party insurance only for personal injury or death, while insuring for damage to cars or other property is left up to the owner — either comprehensive insurance or cheaper third party property policies.
It says motorists who take out insurance pay more in order to cover the risk of loss arising from accidents caused by vehicle owners who are uninsured, whether that’s through choice or because they cannot afford to. Insured motorists pay $1.3 billion more for their coverage than they would if vehicle insurance were universal.
Other costs of the current system include:
Download the report.
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