People who hire cars from drug addicts have been warned by insurers that they will not be covered if they have an accident.

The Royal Gazette revealed yesterday that addicts are hiring out their cars for drugs or cash so they can buy illegal substances.

Bermuda Police said they had recently become aware that "drug cars" were being hired out and that it was a growing problem.

The head of Argus Insurance Gerald Simons said yesterday that insurance companies would not pay out in these circumstances if there was an accident, except to cover the medical costs of a pedestrian or if someone in another car was injured.

This means people hiring out drug cars are taking a real risk because they will have no coverage themselves if they are involved in an accident, he said.

And a victim in another vehicle would only have his medical bills, but not the cost of repairs to his car, covered by third party insurance.

If the victim wanted to recover damage costs he would have to claim through the Motor Insurance Fund.

Since the law changed in 1998, car owners have been able to allow other people to drive their vehicles, but it is understood insurers have not had to face up with the dilemma of whether to pay out if there have been accidents involving drugs cars.

"If someone has a car and is providing it to someone else for a fee, that situation is typically not covered under motor insurance," Mr. Simons told The Royal Gazette.

"They are running a very real risk. They would be wise to check with their insurance company before doing anything."

Some insurance companies offer coverage only of named drivers, which attract for lower premiums.

"If they elect to have the more limited coverage (of a policy covering only named drivers) that cover runs a risk if they hand the car to someone not named."

And for those tempted to hire a drug car, he said: "That is something which has some additional risk and people need to understand that.

"One rule of insurance is that you never have a situation in which everything is covered. There are always exceptions and for good reason.

"We would not want to be party to insurance to persons engaged in illicit activities. That would not be in the public interest."

But insurers have not been aware of the problem of drugs cars, said Larry Osborne, vice-president property and casualty at Argus.

Nor was he aware of any companies having to decide not to pay out because cars had been hired out for money, he said.

"This has never been mentioned to any of the insurance companies. That's news to me. I don't think we've had a situation where hiring is an issue."

Police spokesman Dwayne Caines said in yesterday's Royal Gazette: "This is a growing phenomenon which Police are now being made aware of."