Car insurance costs are peaking at a time when wages are feeling the squeeze of austerity. However, that’s no excuse for cutting corners. If you get caught driving an uninsured vehicle or are involved in an accident and your insurance is not up to date, the consequences will be severe.

Annual premiums in the third quarter of 2011 hit an average of £921. When you consider that the price will be much higher for younger drivers, car insurance can be prohibitively expensive for some.

Counting the cost

Although the thought of driving without adequate insurance cover is unthinkable for most motorists, the Motor Insurers Bureau (MIB) report that it deals with around 30,000 claims each year from people involved in accidents with uninsured and hit and run drivers.

The Bureau estimates that at any time around 4% of cars on our roads are uninsured, costing honest drivers a total of around £500 million a year – that’s an extra £30 on the price of every law abiding motorist’s premium.

But a much heavier price of this criminal activity is the 160 deaths and 23,000 injuries on our roads each year caused by uninsured and untraced drivers.

Crack down

Since the police were given new powers in 2006, they have managed to drive down the number of uninsured motorists by some 13%. The chances of being caught driving without insurance have risen significantly because the police now have access to the national Motor Insurance Database, which is maintained by the MIB.

Armed with information from the database, the police will seize an uninsured vehicle and put six points on the driver’s licence. The fine for having an uninsured vehicle on the road is £200 and the fee for towing it away is £150. The vehicle won’t be released until the owner can provide proof that it is insured. There is a further £20 payable each day for storage and failure to pay up will result in the car being crushed – a fate which has befallen some 160,000 vehicles since the scheme was introduced six years ago.

Should an uninsured driver be involved in an accident, the penalties can be very much higher.

So if you are looking for ways to economise, not paying your car insurance is not an option – you will be committing a criminal offence, and could end up far worse off.

*This post is a guest post by Sainsburys Finance