A closer look at the new compulsory motor insurance rules

UK motorists must now insure their cars at all times or face fines or the loss of their vehicle under new rules which came into force this month.

When do the rules take effect?

Technically the rules came into force on Monday 20th June. In practice, they may not start being enforced until the end of the month.

Are there any exceptions?

Yes: the most notable exception is if a person has made a Statutory Off-Road Notice for the vehicle. There are also exceptions for people who have kept a car off-road since before the SORN system started in January 1998. And the rules don't apply if your car is recorded as stolen, sold on to the motor trade, exported or scrapped.

What is the enforcement process?

Once the rules take effect, there will be regular cross-referencing between the register of car owners and a register of policies held by the Motor Insurance Database. Owners who don't appear to have insurance will be asked to rectify the situation.

What's the penalty?

There are a range of possible penalties. Car owners may get a fixed fine of £100, or could be prosecuted in which case the maximum fine is £1,000. (The driver will still need to get insurance even after paying a fine.) It's also possible a car could be wheel-clamped, impounded or even destroyed.

What practical difference will the rules make to me?

Assuming you aren't intentionally trying to avoid insurance, the biggest risk will come with temporarily lapsed insurance. For example, if your policy lapses while you are abroad on holiday, you might previously have not bothered renewing or finding a new policy until you get back from the trip. Under the new rules this will be illegal as the vehicle must be insured continuously.

How will this affect the way I buy insurance?

Some people will be tempted simply to stick to the auto-renewal on their existing policy: this will avoid the danger of breaching the new rules, but may mean you wind up with a poor value policy. For those who want to shop around, you'll need to consider starting the process earlier to make sure you get the best deal in time to be sure of a smooth switchover.

What if I'm not using my car? How does a SORN work?

Applying for a SORN is a simple process. You can either call 0300 123 4321 or visit http://www.direct.gov.uk/taxdisc. In both cases you'll need the reference number from your registration certificate. You can apply for a SORN at the same time as applying for a refund on your car tax. You can put in your application up to two months ahead of the time when you want the SORN to take effect.