The Motor Insurers Bureau (MIB) has allayed fears that private hire insurers may have to pay out for accidents caused by former customers of unauthorised insurer Goldleaf.

Easypay Insurance Services spokes-man Stephen Bales said his company, a public and private hire vehicle intermediary, had been approached by several cab drivers who had bought insurance from Goldleaf.

Last week Preston police issued a warning to drivers who had bought Goldleaf's insurance, as it was unauthorised and did not comply with the Road Traffic Act. They were urged to seek alternative insurance.

Bales said he feared that, should these drivers have had an accident, he could be forced to pay out by the MIB, as the nearest insurer.

However, MIB claims manager Roger Snook said this could not happen.

“If you're not on risk at the time [of the accident] and have not given a commitment to go on risk, you cannot be forced to pay,” he said.

Snook said the MIB had seen 50 unauthorised or fraudulent motor insurers open in the past ten years.

He said the private hire industry was a particular target of these firms, as cab drivers often found it difficult to get insurance and were accustomed to paying high premiums.

Snook said local authorities helped combat the problem, because private hire vehicles must have council authorisation everywhere except London.

“Their licensing departments will contact us if they see an unusual insurer name come up,” he said.