New Car Insurance Laws Explained

, Jan 10 2013 at 12:08 pm

The laws governing car insurance in the UK have changed quite dramatically over recent years.

First, drivers had to get used to the Continuous Insurance Enforcement (CIE) regulations that came in during the summer of 2011.

As the name suggests, these require all car owners to insure their vehicle or vehicles at all times – whether or not they are being taken on the roads.

Then, on December 21, 2012, a European Court of Justice ruling preventing insurers from using gender to help calculate their car insurance quotes came into force.

Many drivers – particularly female motorists who benefited from lower premiums in the past – are likely to pay more for their car insurance as a result.

Here, we look at why these changes were introduced and their impact on you as a motorist.

Continuous Insurance Enforcement (CIE) regulations

As of June 2011, all vehicles registered in the UK must now be continuously insured.

The only exception to this rule is when the owner has guaranteed that the vehicle never goes on the road by sending a completed Statutory Off Road Notification (SORN) to the Driver and Vehicle Licensing Association (DVLA).

Basically, if you are not using your vehicle, and you can keep it off the public highway, you should fill in a SORN. And if you are using it, it must be insured at all times.

Failure to abide by CIE could result in a court prosecution and a penalty of between £100 and £1,000, while your vehicle could also be wheel-clamped, impounded, or even destroyed.

These measures are in addition to the powers the police already have to seize an uninsured vehicle and fine its driver.

And with the DVLA and the Motor Insurance Database (MID) working together to pinpoint drivers who have not insured their vehicles, the chances of flouting the rules successfully are slim.

The good news, however, is that cracking down on uninsured drivers in this way should reduce the cost of the accidents caused by these motorists.

As these costs are covered by the insurance industry, which adds about £30 a year on the average policy to cover them, this should then translate into cheaper premiums for us all.

The European Court of Justice (ECJ) Gender Directive

In 2011, the European Court of Justice ruled that, from December 21, 2012, insurers could no longer use gender when setting premiums.

The ruling came about after the Belgian consumer group Test-Achats called for new regulations outlawing “discriminatory” pricing by gender.

Unfortunately for safety-conscious female drivers, however, the main impact of the Gender Directive on their lives is that they are likely to have to pay more for their car insurance.

Male motorists, on the other hand, are unlikely to have noticed much of a reduction in the cost of their cover.

Other financial services affected by the Gender Directive include life insurance and the cost of using your pension to buy an annuity (or annual retirement income for life).

Life insurance premiums were formerly lower for women due to figures showing that women live longer (and thus are less likely to make a claim during a given term). With annuities, however, women paid more on the basis that they would receive their annuity payment for longer).

Now, however, life insurers and annuity providers must treat male and female customers the same, increasing life insurance premiums for women and reducing annuity rates for men.

Consumer Insurance (Disclosure and Representations) Act

The Consumer Insurance (Disclosure and Representations) Act received Royal Assent in March 2012 and is expected to come into force in March 2013.

Its aim is to make it more difficult for insurers to refuse to pay out on claims due to the policyholder failing to volunteer material facts.

Instead, customers must take reasonable care to answer their insurer’s questions fully and accurately in order to qualify for a payout.

This should make it simpler for consumers to understand their obligations.

However, there are concerns that the Act will push up insurance costs across the board due to the increased number of claims that will have to be accepted and paid.





11 thoughts on “New Car Insurance Laws Explained

  1. kevin strong

    Could you confirm that having a sorn which means a declaration that car is not used on the road I don’t have to insure same vehicle.
    I ask this because a friend has said even though car off the road now insurance company won’t give refund because they say you have to have insurance no matter what. I think they mean if you hav’nt got sorn. Your help would be appreciated.

      1. Maggie

        Says who???? The big bullies we call government!!!! What if you’re car is parked up, with full tax on it, but no insurance because you don’t use it and you are trying to sell it. Bugger this puppet government, evil Nazi, scum bags. People are not criminals for having no insurance on a car they do not use, because it does not go!!!!
        This is another stealth, a nice little bonus for the big conglomerate insurance companies. Nothing more, nothing less. Oh and a nice little earner in fines for our corrupt bully boys, who masquerade as government.

        1. chris

          Well said! Government are nothing more than that! Insurance, tax etc they have never been down they are always going up, wages are going down too, tax where does it go? I think we all know where it’s goes! Insurance company’s is all about the money and money only they couldnt care less about anything else! Makes me sick!

  2. Terry

    Continuous Insurance Enforcement (CIE) regulations

    “As of June 2011, all vehicles registered in the UK must now be continuously insured.

    The only exception to this rule is when the owner has guaranteed that the vehicle never goes on the road by sending a completed Statutory Off Road Notification (SORN) to the Driver and Vehicle Licensing Association (DVLA).”

    First up, filling out a SORN declaration is NOT and could never be a guaranteed that the vehicle never goes on the road, this is absolute rubbish, just because you fill out a form or declare something online don’t make it so! Also Extortion is a criminal offence, forcing people to pay for insurance where it is not necessary is basically conspiracy to theft, do motor museums, vehicle collectors, new vehicle manufactures and scrap dealers have to fill out a SORN declaration for EVERY vehicle they own? because the law states that only Car dealers are exempt. Still the good news must be that all the uninsured vehicle that the police take and impound are technically being kept without insurance, we can therefore look forward to huge amounts of revenue by way of fines from the police for failing to insure all of their newly aquired vehicles, Assuming that they do not bother to SORN these vehicles.

  3. Paul Morton

    Friends of mine are ‘selling up’ and buying a motorhome so will have ‘no fixed abode’.
    They have no family so have asked if they could use my address to have the necessary ‘fixed residential address’, to obtain European vehicle insurance. Is this legal and ok ?

  4. bill mc clean

    The law states I must have third party insurance for a mechanically propelled vehicle. What about an electric powered vehicle? is that excempt ? There are now electrical powered bicycles, and mobility scooters which dont need insurance. Do electric cars need it

  5. jiva Carter

    i checked on line for insurence – it seems you can only buy a full years worth – what happens if you sell the car before the year is up?

    1. Les Roberts

      If you sell your car and buy a new car, you can then contact your insurer to update the policy so it covers you to drive your new car. If you have sold your car and won’t be replacing it, you’ll have to contact your insurer and end your policy – depending upon how you paid for the policy and how long you have to run, you may either have to pay off the remaining part of the policy you have used or be issued with a refund.

      It’s also worth noting that ending a policy before it is due to end means you won’t get a year’s No Claims Discount entitlement for that policy.

  6. richard

    I was conned by a so called friend he set up insurance for his car in my name making me the main policy holder with out telling me then 5months later he was band so stopped paying then 1st central insurance contacts me asking me for the payment prior to this I had zero contact from ist central police say this is a civil matter not criminal and wont help now I have debt collectors at the door

    1. Les Roberts

      Hi there,

      This sounds a real nightmare and insurance fraud shouldn’t be taken lightly by the authorities.

      It might be worth contacting City of London police for advice via their website… for advice.

      Although they’re London-based they should be able to point you in the right direction.

      You could also try contacting Citizens Advice, see what they say (

      Hope you manage to get it sorted.


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