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Dan White: No matter how tough things get, car insurance is not an optional extra

As the recession bites ever deeper, hard-pressed consumers are cutting back on all sorts of expenditure, including insurance.

A recent survey indicates that more than one in eight of all of those questioned had cancelled some sort of insurance payment.

Among those who have cut a payment, more than a quarter have dropped travel insurance while a similar proportion of those surveyed have given up life assurance, according to research conducted by life assurance company Friends First.

Nearly 25pc of those who have given up making insurance payments have also stopped making motor insurance payments.

The fact that the proportion of people dropping travel, life and motor insurance is so similar almost certainly indicates that there is a large overlap between the three categories.

What this means is that large numbers of people who have lost their jobs are cutting back on all insurance payments as they desperately seek to pay their mortgage and put food on the table.

While the short-term costs of abandoning life cover or travel assurance are slight, it is a different story with motor insurance.

Accident

If the research is representative of the population as a whole that could translate into something like an extra 80,000 motorists driving without insurance cover. Bad move.

Unlike life or travel insurance, motor insurance is not an optional extra, something which can be dropped in hard times.

You cannot legally take a car onto the road without car insurance. It is an integral part of the cost of running a car.

And this is not some esoteric legal principle. Motor insurance is compulsory for a very good reason. If you are involved in an accident while driving and it's your fault then you could very easily find yourself facing a bill running into hundreds of thousands or even millions of euro.

Paying such a bill is beyond the means of most of us. If we had to fork out even a fraction of that sort of cash then we would be totally ruined.

Your home and everything else you own would be on the line. Even third-party insurance means that it is the insurance company rather than the driver who picks up the tab for the cost of any damage or injury caused by the motorist.

Even if you are not involved in an accident, driving without insurance is a serious offence. Even being caught for the first time will land you with five penalty points, a disqualification and a hefty fine. Some saving.

In other words, if you can't afford motor insurance then the brutal truth is that you can't afford to run a car.

Motor insurance is as much part of the cost of running a car as the loan repayments, petrol, motor tax and repair costs.

Injured

Running a car is not an inalienable, God-given right. Anyone taking a car onto the road also has to meet certain obligations. With an average of almost five people a week still dying on our roads and many more being serious injured, it is vital that all motorists are properly insured.

During the Celtic Tiger years car sales soared and the number of private vehicles on the road almost doubled in a little over a decade. This process has now gone into reverse.

Since the economic bubble burst in 2007 new car sales have fallen by more than two-thirds. The rapid fall-off in the number of people able to afford motor insurance means that the number of cars on our roads is set to fall sharply over the next few years.


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