Motorists are being ripped off by at least £270m a year by being tricked into paying for insurance they do not need, according to a drivers’ charity.

Most of Britain’s 24 million drivers pay at least £15 a year to cover personal injury claims. But according to the Accident Relief Campaign (ARC) the cover is useless and goes straight into the pockets of the insurance companies.

"Most drivers pay the completely unnecessary legal expenses cover charged by many insurers for personal injury which is worth at least £270m a year to the industry," Nigel Mills at ARC, said.

"This money should be used to reduce premiums not to line the pockets of an already £10 billion industry," he added.

Most insurers automatically add personal injury cover to their car insurance policies. Drivers can opt not to pay it, but most are unaware of this because insurers hide the details in the small print of their policies.

Insurers justify the charge by claiming that it will cover drivers who are involved in a road accident and need to make a personal injury claim in court.

But ARC said it is a waste of money because all personal injury claims are on a no-win, no-fee basis. If you are involved in an accident for which you are not to blame, make a claim against another driver and lose your case you pay nothing to the solicitor representing you.

On the other hand, if you win, the other side pays your costs. If you are the cause of the accident and someone else makes a claim against you, your regular car insurance covers you anyway.

ARC has written to the Office of Fair Trading and the Financial Services Authority, the insurance company watchdog, to call for an investigation into the unnecessary premiums and lack of transparency in the provision of personal injury insurance.

ARC also wants to see an end to the payment of kickbacks for legal work. It claims that many insurance companies, claims management companies and motorists’ organisations demand payment from solicitors to be included on their panel of recommended lawyers.

"The solicitor to whom you are referred has, in nearly every case, paid your insurer directly, or indirectly via a claims management company," Mr Mills said. "Your claim has been sold to the solicitor who has typically paid out between £400 to £600 as a referral fee, enabling your insurance company to make a fast buck out of your accident."

ARC campaigns on behalf of the Motor Accident Relief Society, a charity set up to help victims of non-fault road traffic accidents who are thinking of making a legal claim.

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