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.





32 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.

  7. toni

    new rule?

    my dad has been told that the rules have been changed for driving someone else’s car but still being covered on his insurance.

    Basically my dad could drive my car under his own insurance but had been told that this has been changed and he must be on my insurance to drive my car.. is this true.

    He is already on my insurance anyway so either way he is covered.

    1. Les Roberts

      Hi Toni,

      He’ll have to check his policy documents, see what they say, but there is a chance his insurer could have moved the goal posts so he’s no longer covered under the terms of his own policy. However, there are plenty of insurers who still offer third party cover for driving other vehicles as part of their comprehensive cover.

      If your dad regularly drives your car though, it could be worth him being a named driver on your policy anyway as this means he is fully covered to drive your car and so if he was at fault in an accident the insurer would pay for repairs to your car and any other cars involved.

      On the other hand, if he was at fault for an accident driving your car and was covered under the terms of his own policy, this means he would only have third party cover and so the insurer would only pay out for damage to other vehicles but not your vehicle.

      Hope that all makes sense, give me a shout back if you need anything clarifying.

  8. Patricia

    Advice needed! I am a named driver on my uncles policy! I was in a collision this year with another driver. Its now apparant that the other vehicle was insured on day of collison under a traders policy, the 3rd party insurers are stating the car was sold 3days prior to the collision and are refusing to accept liability! Its one big mess and caused massive issues between myself and uncle! I have 2 independent witnesses and a police report regarding this matter but still nothing is being resolved because the car was sold 3days before. Is ot not if the car was insured on the day that its down to the insurance company to resolve the matter and claim the costs off the person who was driving the vehicle at that time? Not try drag this situation out because in the meantime my uncles car still has a considerable amount of damage that needs to be resolved!

    1. Les Roberts

      Hi Patricia,

      As there appears to be some confusion as to whether or not the car was actually insured at the time of the collision, you’re best off contacting the Motor Insurer’s Bureau (MIB) – you can find out more on making a claim through the MIB, here…

      ..and here…

      You can email details of your case to and contact them on the phone by calling 01908 830001.

      Hope that helps, and good luck with everything.


  9. Cass

    Are there any specific insurance requirements for cars purchased on finance? I know in some countries you need fully comp on a finananced car is England one of them?

    1. Les Roberts

      Hi Cass,

      You’ll usually have to take out fully comprehensive cover when buying a car on finance – though this may vary between finance providers so it’s worth checking when you agree on a finance deal.

      If possible though, don’t go with the insurer recommended by the finance company as this is unlikely to be the best deal on the market – instead, take a look at our car insurance channel and shop around for the best priced cover, you may even find fully comp is cheaper than third party cover anyway.

      Hope that helps.

  10. Kevin Burns

    help!?! im an employed mechanic who was asked by a “friend” to drive his car and give an opinion on a driving issue he had with it. in the process of it and during adverse weather conditions i damaged it and he is now suing me for £10’000 to cover all costs in his repairs as his insurance has stated that i should not have been driving it and my insurance only covered 3rd party fire and theft. is he responsible for making sure there is adequate cover on his vehicle for his own needs before asking someone else to drive it? can he legitimately pursue me for those cost?

  11. Les Roberts

    Hi Kevin,

    Sorry for the delay on this, it all sounds a very murky so we’ll need a few more details if possible?

    Am I right in saying he was insured to drive the vehicle (and so the vehicle was fully insured to be on the road) and you have fully comp cover that allows you to drive any other car, with permission, and grants you third party only cover for that car?

    And, with regards to the accident, were any other parties involved? If so, did your insurer pay out (or has it agreed to pay out) for the damage to the other vehicles or property?

    Is the crux of the matter that your insurance didn’t include paying for damage to his car – although it was enough for you to take it on the road – and so he is pursuing a legal claim against you for the damages?


  12. Clare Aaron

    Can anyone help, I have a couple of issues relating to cancelling the insurance on my 18 year old son’s car which has been declared SORN because of a mechanical issue with the vehicle that appears un-fixable. Basically the car won’t run on idle, it cuts out and won’t re-start on occasion. 2nd issue is with the dealer.
    We have only had the vehicle for a little over 5 months and the problem arose approximately 1 week after buying it. It has been into 4 different garages none of which are able to diagnose the fault.
    The first garage it went into was the garage used by the dealer in Walsall, it went back to them again a couple of days later. They were the first to fail to diagnose the issue. The dealer then suggested we use the warranty provided. The warranty conditions declared that I could use any independent garage/mechanic but that the diagnosis was at our cost, it has been to three other garages including Volkswagen and none are able to diagnose the fault. What are our rights regarding re-dress from the dealer? Currently he is failing to respond to any phone calls by saying ‘I’ll call you back’? The warranty has now expired.
    2nd issue is that because it is virtually undriveabe the vehicle has been declared SORN. I am trying to cancel the insurance with ‘insure the box’, but because the vehicle was involved in a minor incident with an automatic bollard in the road raising up as it was being driven over it and clipping the car underneath setting off the air bag they are refusing to cancel the insurance and saying that I am liable to keep the policy open for 6 months and need to pay the full premium. (This is made monthly by direct debit and is quite expensive) it states in the policy documents that the full payment is due if a claim has been made. The damage was minimal and less than the excess in cost so no claim was made against the policy. It was recorded by the black box and the insurer contacted me directly within 5 minutes of the incident happening.
    I have asked them to contact me to let me know where it states any of this is my policy documents, or where is says legally that this is what is required. So far 6 days later, they have failed to respond.
    I spoke to 5 members of their staff none of which are able to give me an answer to either question.
    All I want to know with regards to paying for the policy is, is this a legal requirement and whether it should be stated in the policy documents?
    If this is the case, I have no issue with paying what is due.
    Any helpful comments/advice would be gratefully received. I don’t know where to turn.

    1. Les Roberts

      Hi Clare,

      If the policy wording states full payment is due in the event of a claim but no claim was made, then I don’t see how the insurer can demand the full payment or refuse to cancel the policy.

      The best thing to do now would be to make a complaint to your insurer – more details here – and explain although there was an accident (a not-at-fault accident by the sound of it) no claim was made and so they can’t refuse to cancel the policy, nor can they demand full payment.

      If you get no joy from the insurer, you can then take the claim to the financial ombudsman service – – who may then take your case on (you have to give your insurer up to eight weeks to respond to your complaint).

      Hope that all makes sense, let me know how you get on, or if you need anything else.

  13. Kevin Burns

    Hi Les, thanks for getting back to me. Yes you assume everything correctly. The vehicle was fully insured under his name although it wasn’t till after the incident I found out that his insurers specified no one but the policy holder could drive it. No other parties were involved so needless to say my insurers would not get involved as I was driving on my own policy as 3rd party (if that still stands due to his policy wording on named driver only use)
    So yes he is pursuing me for costs as his policy will not “pay out”

    1. Les Roberts

      Hi Kevin,

      Sorry for the delay in getting back, I was away and missed your reply. On the face of it, I would say he doesn’t have a case against you as you had third party cover (so you were legally able to drive the car) and it was his insurer which had the caveat that only he can drive the car.

      As far as I can interpret it, as it is his car, it is his responsibility to make sure it’s insured, even when someone else is driving it, so I don’t see how you can be implicated from an insurance angle – although you had the crash, you upheld your end of the bargain by making sure you were covered, it was your friend’s oversight that meant you actually weren’t.

      However, from a legal angle, I wouldn’t imagine there is anything to stop him making a claim against you in court and I have no idea where you would stand in that regard – though, as I say, it appears you covered the bases insurance-wise and I imagine that should count in your favour if any claim was pursued.

  14. Kevin Burns

    Hi Les
    Thanks very much for your reply, I appreciate your advice and have found it more comforting and informative than the legal advice I paid for earlier on in the year (all though I realise that what you’ve said to me is in no way legally binding or a definitive answer to my problem)
    My case is due to be heard early October so I will keep you informed of the outcome so hopefully you can use it as a reference should you have any peculiar queries put to you in the future.
    Once again, many thanks for your input.

      1. Kevin Burns

        Hi Les, just to keep you posted as promised.
        Turns out you were spot on with your opinion. It wasn’t a question of breaking the law with regards to car insurance. It was a simple black and white matter of the fact that I damaged somebody’s property and that person is entitled to compensation (to the sum of £7500 inc court fees)
        Thanks again for your advice and hope this can be used as an example for anyone else in the future.

        1. Les Roberts

          Hi Kevin,

          Glad I could help out a little – funnily enough I was just thinking about your case this morning – it sounds like the court found in favour of the complainant though. Sorry to hear that.

          Thanks again for getting back to me, feel free to get in touch if you have any other questions.



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