Lack of motor insurance among low-income earners could be reduced through stamp duty reforms, an awareness campaign and extensions to third-party cover, anti-poverty campaigners say.

A report from the Brotherhood of St Laurence says owners of 2.3 million uninsured vehicles are risking the cost of accidents that many cannot afford, while insured motorists pay $1.3 billion more than they would if everyone bought policies.

“We need to rethink Australian motor insurance,” Financial Inclusion Senior Manager Tony Robinson says. “Many can’t afford to insure their vehicles, yet are dependent on them for daily living, particularly in outer-suburban and regional areas where housing costs less but public transport is scarce or non-existent.”

The report says insurers could run an awareness campaign on the need for cover, with some drivers mistakenly believing it is included in state-run compulsory third party schemes.

Standardising a third party policy “uninsured motorist extension”, which adds extra protection if a driver’s vehicle is damaged by an uninsured motorist who cannot pay, would also benefit low-income Australians who cannot afford comprehensive cover, it says.

“If insurers are not willing to do this, the Australian Government should consider mandating that standard.”

State governments should remove stamp duty from policies developed by insurers for low-income drivers, and could consider separate tribunals to resolve accident disputes.

“Mandatory insurance is not the answer because it will punish poor people,” Mr Robinson says.