Uncertainty continues to rein in the UK as EU leaders agree to delay Article 50 and extend the Brexit deadline beyond 29 March.
After eight hours of talks last night, EU leaders offered to delay Brexit until 22 May if MPs approve of the withdrawal deal negotiated with the EU next week.
If this deal isn’t approved, the UK will have a shorter delay until 12 April to set out its next steps for Brexit or crash out of the EU without a deal.
Prime Minister, Theresa May, said there was now a “clear choice” facing MPs, who could vote for a third time on her deal next week.
If the UK leaves the EU on 12 April without a Withdrawal Agreement in place, it will have an effect on the way that your insurance policies might work.
Here, we take a look at how a no-deal Brexit might affect your car, travel and pet insurance policies.
What might a no-deal Brexit mean for your car insurance?
The good news is that after Brexit, all car insurance providers will continue to provide the legal minimum cover for travel to countries in the European Economic Area (EEA).
This means that you won’t need to purchase additional insurance if you travel to these countries with a UK-registered vehicle.
The not-so-convenient- news, however, is that if the UK leaves the EU on 12 April 2019 without a Withdrawal Agreement in place, you will need to make sure you carry a physical Green Card when driving to Europe, including the Republic of Ireland.
A Green Card is an international certificate of insurance which is issued by insurance companies in the UK. They guarantee that drivers have the car insurance cover to be driving in the country that they’re travelling to and through. You can see a full list of countries in the EEA on GOV.UK.
Green Cards have to specify the licence plate number of each individual vehicle travelling in your group. This means that if you’re travelling with multiple cars, trailers, towed vehicle or even a classic car, you’ll need to get Green Cards for them too.
In new guidance, the Association of British Insurers (ABI) warned drivers to check with their insurance provider as soon as possible to ensure that they get a Green Card if needed in time if they plan on driving to Europe after 12 April.
Driving without a Green Card may be considered breaking the law – similar to driving without insurance in the UK – and could leave you subject to a fine, having your vehicle seized or prosecution.
- Find out more: best and worst car insurance
What might a no-deal Brexit mean for your travel insurance?
One of the biggest concerns regarding a no-deal Brexit is whether or not travel insurance policies will be cover flight disruption. An estimated five million airline tickets may be cancelled in the event of a no-deal Brexit.
Insurers haven’t taken a unanimous approach to this. Research carried out by Which? Travel found that some providers including Direct Line, Admiral, Aviva and Saga said that that they will cover Brexit-related cancellations, others are yet to confirm whether or not they will provide protection.
If you plan on traveling after Brexit and haven’t yet bought insurance, look at policies that have good cancellation cover, which will pay out if your flight or holiday is cancelled due to Brexit-related disruption – and buy early as possible to ensure that your trip is protected.
if you already have cover, check with your travel insurance provider if you’re travelling to an EEA country after 12 April 2019 to see whether or not you’ll be covered.
A European Health Insurance Card (Ehic) is a free medical card, which can be used throughout the EU, Iceland, Liechtenstein, Norway and Switzerland. It entitles you to treatment in state hospitals at the same price as residents of the country you’re visiting.
Ehics are a handy accompaniment to a comprehensive travel insurance policy and should not be considered a replacement for buying travel cover.
As well as medical expenses, travel insurance covers the cost of cancelling your holiday if you need to return home early, as well as covering you for lost or stolen luggage.
If the UK leaves the EU without a deal, the Ehic will not be valid after April 2019. If a Brexit deal is agreed, Ehics should remain in operation until December 2020.
It is unknown what will happen after that – the UK has stated that wants to keep the Ehic in place as part of future trade negotiations with the UK.
Insurers have warned that premiums could rise as a result of Brexit and the loss of the Ehic, and that some people who may struggle to get affordable travel insurance because of ill health may not be covered without an Ehic.
- Find out more: travel insurance explained
What might a no-deal Brexit mean for your pet insurance?
In the case of a no-deal Brexit, your pet will need to have a series of checks and procedures completed before it can travel to Europe.
This includes ensuring that your dog, cat or ferret is microchipped and then vaccinated before travelling.
The government advised that you contact your vet at least four months before travelling with your pet if you plan to go abroad with it after April 2019.
- Find out more: best and worst pet insurance
Will insurance premiums increase after Brexit?
It’s difficult to say what effect Brexit will have on insurance premiums until the terms of the UK’s withdrawal are confirmed.
What we can do, is take a look at how insurance premiums have reacted in the past.
For example, in the second quarter of 2016 when the EU Referendum vote was announced, the average car insurance premium spiked to £511 – up from £481 in the previous quarter. Premiums then increased again to £582 by the end of 2016, according to the Moneysupermarket Car Insurance Price Index.
The graph below shows the average car insurance premium from Q1 2013 to Q4 2018.
While these figures could suggest a correlation between the Brexit vote and insurance premiums increasing, there was another factor at play during this time.
An increase in Insurance Premium Tax from 6% to 12% was introduced from 1 June 2016.
This was reported to have caused an increase in insurance prices for general insurance products including, home, pet, car and travel insurance.
What do the experts say?
Dean Sobers, insurance expert at Which? said: ‘Brexit seems to be getting less and less predictable the closer we get to the date. While we’re spending time worrying about whether our passports will still work or which driving permits would be required, it’s also worth taking stock of whether your insurance arrangements are suitably robust.
‘Fortunately, we needn’t panic about our policies going up in smoke in a no-deal scenario.
‘Brexit presents a heightened risk of travel disruption – which means that disruption cover is more valuable to have. Not all travel insurance policies include this – and in some it’s an optional feature.
‘Additionally, some travellers have made savings by not insuring some of their more costly-to-cover medical conditions (knowing that access to public healthcare in Europe is available under Ehic). With continued access uncertain, you’ll need an insurance policy that can pick up the slack – so paying a little extra could be worth it.’
Huw Evans, Director of the ABI said: ‘As it looks increasingly possible that a no-deal Brexit may happen, we want all insurance customers to know the facts about what this means for them.
‘If you live in Northern Ireland and drive to the Republic of Ireland, or if you plan to drive your vehicle to mainland Europe after a no-deal Brexit, you will need a Green Card to prove you are insured. You should contact your insurer before you travel in order to get one. This advice applies to businesses as well as individuals.
‘Despite ‘no-deal’ uncertainty about the European Health Insurance Card (Ehic), I also want to reassure people that their travel insurance will continue to operate in the normal way when it comes to medical expenses, as emergency medical treatment is a standard feature. Customers should always double-check their travel insurance policy meets their full needs.
‘It remains the case that insurers do not want a no-deal Brexit; it would be bad for the economy and bad for our customers. We continue to hope these arrangements are never needed and urge the government, UK Parliament and EU27 to agree on an orderly way forward.
Stuart Lloyd, Travel Insurance Expert at insurer Columbus Direct: ‘In the event of a no-deal Brexit, there shouldn’t be an immediate increase in price, but over time there is likely to be some impact – particularly for European policy costs, which are likely to increase if we lose protection provided by the Ehic or a similar reciprocal health agreement.
‘Annual worldwide policies could also be affected because of the increased costs from those purchasing a worldwide policy, but taking trips within Europe as well.’
A spokesperson for insurer Saga said: ‘It is too early to tell what the future impact of Brexit will be on premiums, however, one thing that really concerns us is the effect that withdrawing the Ehic will have on people, particularly those with serious illnesses.
‘The Ehic currently enables people with serious medical conditions to travel and still receive treatment.
‘For example, kidney dialysis costs thousands of pounds a week and Ehic allows people to have the same treatment abroad for free, so they can enjoy a holiday without worrying about the cost of dialysis and the effect this might have on their insurance.
‘Losing Ehic, therefore, could affect this more vulnerable group of people, to the extent that they might find they are unable to travel at all.’
Additionally, many insurers, including Saga, waive a customer’s excess for medical expenses if they use their Ehic card abroad. Without an Ehic… it remains to be seen whether insurers will still be able to [do this].
A spokesperson from insurer NFU Mutual said: ‘Typically NFU Mutual customers insure their homes, farms, cars and much more in the United Kingdom, and customers with insurance policies for these UK risks won’t see any change to their cover.
‘Premiums increase and decrease for a variety of reasons but our members should not experience any immediate change to their premiums as a direct result of Brexit.’
What can you do?
Now more than ever, it’s vital to check the terms and conditions of your insurance policies and get in touch with your insurance providers.
While the FCA has advised insurance companies to clearly communicate any Brexit related changes to you, it’s vital you get ahead of the game and get in touch with them if you think you might be affected.
The government has issued advice that ‘you should make sure you understand the terms and conditions of your travel insurance policy, and that the policy is sufficient to cover possible disruption.’ This applies to your car insurance and pet policies too.
If you’re unclear about any of the details in your policies then call your insurance provider as soon as possible to get clarification and any additional documentation you might need.