Up to 40 community car clubs across the UK could be forced to close after the last insurance firm covering such groups announced it was pulling out of the sector.
For several years, the clubs – often groups of like-minded neighbours – have been sharing cars as a way to cut their carbon footprint.
They typically have three or four collectively owned models in their car pool, and have relied on a single insurance policy that allowed members to drive all of the vehicles.
These initiatives have previously been hailed as a greener alternative to full-time car ownership, particularly in rural areas where there is limited public transport. However, unless ministers, or another body, step in with a solution – or there is an 11th hour U-turn by insurers – the sector could be forced to shut down.
Chris Wilson, who helps run a car co-operative at Marmalade Lane, a low car, co-housing scheme in north Cambridge, said its group faces closure next month after the insurer said it wouldn’t renew the £3,000-a-year policy. “Currently we have around 25 residents who collectively own and share four cars, including an all-electric model, a plug-in hybrid, plus two conventional cars,” he said.
“The scheme has worked brilliantly for us – we each pay a small trip and mileage charge each time we use a car, choosing the best car for that particular journey – and we have had no insurance claims.”
Despite this, the club has been unable to find insurance for when its current policy runs out in April.
“Our broker, an expert in the field, has told us they have not managed to place a single car-share risk this year,” said Wilson. “We expect that we will have to sell, mothball or loan the cars to members when our insurance runs out. It’s so frustrating – to be let down by what is in effect a market failure in the insurance sector.”
Car insurance premiums have soared in recent months as the cost of repairs has risen. As well as facing rising prices, some drivers are finding it increasingly difficult to get cover for their vehicles.
Richard Dilks, who runs CoMoUK, the national charity to promote shared transport, including car clubs, said the sector was facing an existential crisis, “at a time when we need them most”.
“Getting insurance [for small car clubs] has become harder and harder since Covid as one by one all the big insurers have pulled out, apparently fearful of insuring something a little out of the ordinary. We don’t understand why it has become so, as the risks haven’t changed. Now the last firm providing cover has pulled out with devastating consequences.”
Dilks said some clubs had already closed, and others were currently unable to use cars while they looked for a solution. One had just taken delivery of new models that it could no longer use because it had no insurance.
The charity has appealed to insurers through the Association of British Insurers and had meetings with government ministers – anotheris planned later this month – but so far, to no avail.
A spokesperson for the Association of British Insurers told the Observer: “While insurers are supportive of different modes of transport and vehicle ownership, car clubs present a unique challenge wherein driver risk is difficult to measure. However, we understand the importance of car clubs to certain communities and we are currently discussing the situation with our members and British Insurance Brokers’ Association.”
The Department for Transport said: “Insurance premiums are a matter for individual insurers, however, we understand the importance and benefits of community car clubs and continue to work closely with the motor insurance industry to support the wider sector.”
Dilks said: “Car clubs are important because they provide vital low-car lifestyle options to people, often in rural areas, but their very existence is under severe threat. Given the UK’s legal commitments to net zero and the cost of living crisis, now is the time to have more of these schemes that offer low-cost access to greener cars, not less.”
One solution for the affected groups could be to cease to be independent and instead place their cars with one of the bigger car clubs such as the peer-to-peer platform Hiyacar, which already hosts several closed car clubs, and offers access to the all-important insurance, albeit it at a likely higher cost than they currently pay.
