Compulsory third party vehicle insurance mooted

01:43, Jan 31 2009

The Government is seeking views on whether third party vehicle insurance should be compulsory.

Transport Safety Minister Harry Duynhoven, a long-time advocate of the idea, today released a discussion paper on the issue which also looks at whether regulation of the insurance industry was needed.

The process aims to see if there is public support for a compulsory third party scheme.

"About a quarter of vehicles in New Zealand are not insured. The insurance industry estimates the cost of uninsured motorists is between $53 million and $85 million each year," Mr Duynhoven said.

"At present, those who have vehicle insurance are paying for the costs of all motorists through their insurance premiums."

The proposed scheme would only cover property damage, as ACC covered crash injuries. Motorists would still need to buy full insurance to cover costs should they crash their vehicle.


"A compulsory third party regime would address issues of equity and road safety. At-fault insured motorists would be protected against potentially hefty costs in the event of a crash and responsible drivers wouldn't be left out of pocket."

Mr Duynhoven said the scheme could improve the behaviour of high risk drivers as they would face higher premiums.

Mobility scooters would not be affected. The document suggests exempting vehicles if they were already exempt from the ACC levy and vehicles covered by another insurance policy; for example farm or adventure tourism vehicles.

The statement noted the Insurance Council had reservations about compulsory insurance but work cooperatively if it was introduced.

The council had concerns about enforcement and being forced to ensure high-risk motorists. The council believed young motorists would face higher premiums.

Other countries that have compulsory insurance regimes included United Kingdom, most of Western Europe, the United States and Canada.

The document is available at Submissions close on August 8.