UK Car insurers to make over £1bn profit if lockdown lasts for three months

Britons are between a rock and a hard place when it comes to car insurance. The Department of Transport’s (DfT) continuous insurance enforcement (CIE) regulation makes it a legal requirement for anyone with a registered vehicle in the UK, to insure it at all times.

There are a few exclusions, one of which is if you’ve taken your car off the road and hold a Statutory Off Road Notification (SORN) certificate. If the lockdown and isolation continues, Britons could lose months of their annual car insurance policies, being forced to be covered, while they’re stuck at home.

“Insurers need to come to the party and offer customers support and much needed flexibility to help them best manage the headwinds ahead,” said Freddy Macnamara, founder of Cuvva, the flexible car insurance provider. 

Government figures have confirmed that motor vehicle use in the UK is down two-thirds. Insurers have also seen a reduction in claims. According to Insurance Post, some insurers have seen claims drop by as much as 50% in one week, since lockdown, which can be attributed to far fewer vehicles on the road.

Data from Cuvva also confirms that consumers are mainly using their vehicles to go grocery shopping or to help friends, family and those in their network that are elderly or unwell.

Macnamara says, “With 50% fewer claims, car insurers could be making over £1bn in profits from the lockdown over three months. Consumers should open dialogue with their insurers if they’re struggling to meet monthly car insurance payments or feel their annual policy should be adjusted.

“Arrangements need to be made in the interim, especially for families that are struggling financially. Insurers can pause payments, while consumers get back on their feet. Given annual policies were based on assumptions that are no longer correct, surely it’s only fair to readjust policies to factor in the current climate, as cars sit at home?”

Consumers could save £100’s on their motor insurance if insurance was modern, flexible, and consumers weren’t tied into long contracts.

Here is some useful information and proactive steps one can take to help manage their car insurance needs during this new normal at home.

Mid-term adjustments

If you need to make mid-term adjustments and your insurer charges you to make any adjustments, ask them if they’d waiver the fees, you’ve got nothing to lose.

“If you’re one of the many that are now working from home for the foreseeable future, and only use your car for essential travel, there’s no harm asking your insurer for a partial refund. Your car is now mostly sitting at home, and the risk of you needing to make a claim has reduced, it’s only fair that your insurer takes this into consideration,” says Macnamara. 

Shop around if your insurer is rigid

If your insurer is rigid and can’t offer you any flexibility to support your needs then shop around. Insurance offerings vary from one insurer to the next. Chatting to other providers will help you gauge the options available to you.

“What’s important is making sure you opt for the right level of cover for your needs, while your car is parked at home and also when you need to use your car for essential travel,” says Macnamara.

Temporary cover without commitment

Temporary car insurance is one alternative, if you need to borrow someone’s car or lend your car for a few hours to run essential errands. The flexible nature of hourly car insurance allows you to buy a comprehensive policy only for the time that is needed.

If a household has more than one vehicle and all are working from home – unused vehicles can be SORN. One remaining insured vehicle could be shared amongst the family with additional drivers buying hourly car insurance for essential errands.

Supporting NHS discount

If you’re an NHS worker and want to avoid car sharing to get to work, Cuvva has been offering all NHS customers on the frontline 50% off their temporary car insurance policies to help them borrow cars to get to and from work safely.

Using your car for work in response to COVID-19

Good news, if you’re now having to use your car to get to work because of the impact of COVID-19, and you can’t work from home, your insurance policy will not be affected. You don’t have to inform your insurer or adjust your cover. This is according to the Association of British Insurers, who has stated that this also extends to those that are using their car for voluntary purposes, supporting communities. An example where this would apply, would be for NHS Volunteer Responders, including transporting patients, equipment, or other essential supplies.

If work is critical to the national response to Covid-19 and you need to use your own for work purposes, your cover should not be affected.