More people are potentially putting themselves at risk by relying on third-party coverage.

Since 2004 Colonial Insurance has seen a rise of 100 percent in third-party insurance for cars as people look to cut their bills. The increase is not as significant for cycles at 19 percent but is still markedly noticeable over the period.

At the same time Colonial is still seeing confusion over insurance when people buy new cars or bikes — leaving them vulnerable to huge bills if they are in accidents.

The apparent trend to buying only third-party insurance can be a risk and a possible false economy to the vehicle owner. People rarely feel that they will ever have a claim but it can happen in the blink of an eye, and even the best drivers can have an “at fault” accident.

I suppose it is a sign of the times in that people are still feeling the effects of a recession in Bermuda and are wanting to save some money, but if you damage your car in a small fender bender and it’s your fault, or if your bike is stolen, and you only have third-party insurance, it could leave you exposed to costs that you will incur. But of course, at the end of the day, if people can only afford third-party insurance, this will cover the injured third party and this is where the largest payouts occur.

Of greater concern is the fact that some people are driving without any valid insurance because they did not understand the law when buying a second-hand car or bike.

If you buy a vehicle, you have to buy new insurance in your name. The insurance on a vehicle stops when a bill of sale is signed. The old insurance is no longer valid.

We have seen cases where people are held personally liable. They have not bought insurance for themselves because they think they are still covered under the previous owner’s insurance, but the existing insurance on the vehicle is not transferrable.

The insurance premium is transferrable, ie the new owner will get a credit from the old insurance policy, but the actual policy coverage is not. The new owner must get a new policy in their name.

The Motor Insurance Fund (MIF) was established in 1990 to compensate victims of uninsured or untraceable drivers and details of the Fund can be found at www.mif.bm. Its purpose is to compensate victims of uninsured or untraceable drivers and it only covers personal injury, not damage to vehicles or property.

Not having insurance, or not having the right kind of insurance can have terrible repercussions, not only to the victim but also to the driver. I hope that everyone will ask their insurer questions to make sure that they have the best type of policy for them, and also make sure that they buy their own insurance when they purchase a second-hand car or cycle.

Jennifer Murdoch is general manager at Colonial Insurance.