At What Age Do You Move from Comprehensive Insurance to 3rd Party?

Our 2008 Corolla is coming up on it's annual comprehensive insurance due date and I'm starting to wonder what price point I should consider trading in the comprehensive for 3rd party.

Last year we paid $600 for $8800 cover with a renewal of $1000 - same coverage (!!!) - 1 hail damage and 1 windscreen claim in the last year but $1000 still seems excessive!

Getting a new quote, seems that ~$550-$600 will get us $6000 cover. All 3rd party quotes come in around $250.

What price point do you start looking at 3rd party instead of comprehensive?

Comments

    • +26 votes

      ?? Do you understand the difference between Third Party and Comprehensive?

      I have my 2005 Magna on Third Party, cause spending $700+ per year on Comprehensive for a $3000 vehicle is not worth it when weighed against the financial risk to me.

      I can afford to buy a replacement (in fact better than replacement) vehicle should the worst happen and it's my fault, and the costs of the "innocent" party are covered if I hit someone else.

      • +10 votes

        What if you're hit by an uninsured motorist? Will you pursue them yourself or just write it off?

        • -1 vote

          no win no fees

        • +5 votes

          @phunkydude: No lawyer would take this kind of case on a 'no win no fees' basis. It's those lucrative cases vs deep pockets that get this kind off costs arrangement.

        • +9 votes

          Probably write it off to bad luck. (I'd be pissed off of course)
          Insurance is all about alleviating risk.
          The risk of this occurring is low, likely far lower than the risk of me hitting someone else and that is already a risk I am happy to shoulder.

          I can still afford to replace my own vehicle and over the past 4 years since moving to Third Party only, I've saved the majority of the replacement cost of the vehicle.

        • +2 votes

          A few TPP insurers will pay out up to $3000 in those circumstances - as long as you can prove the accident was caused by the other party and you are able to identify them (ie not a hit and run)

        •  

          AAMI repaired mine for free a few years back, they will chase up the 3rd party as long as you can proof you're not at fault and the 3rd party is uninsured.

        •  

          @blonky: Gee, Id like to know which ones. Do tell….

          I think you'll find these policies are "Third party, fire and theft" so you are not covered for your car in an accident.

          But please show me if Im wrong.

          That would be a great DEAL for OzBargainers

        • +1 vote

          @Amayzingone:
          A number of insurers offer 'uninsured motorist benefit' or similar on TPPD policies
          You don't need TP Fire & Theft
          I know Elders cover it and a quick Google says maybe NRMA, AAMI, Real and others
          Note only works if they at fault party is uninsured - if they are insured you need to deal with their insurer - this can be harder than dealing with your own of course

        •  

          @HighAndDry:
          Small claims court can deal with matters under $10,000 . Lawyer not required for either party. Minimal if any, 'costs' awarded.

        •  

          @ozzpete: Yup, but was replying to:

          "no win no fees"

          And even in small claims court, the evidentiary requirements for a motor accident make it difficult to be successful without a lawyer, unless the other person basically admits fault. (Obviously depends on the actual circumstances, but it's harder than say, someone refusing to repay a loan).

  • +12 votes

    tipping point for me is when premium costs 1/4 of "value" of the car.

    .

    •  

      I figure it's around that mark too.
      Provided you can afford a replacement.

    •  

      Dont forget to add the cost of the Excess to the policy premium since the excess can more than double your costs in the event of an accident.

  •  

    I guess when you feel comfortable about having to buy a whole car again - or paying 100% of the repairs.

  • +6 votes

    Age of car irrelevant. Cost of car is what is important. Personally if my car was less than $5000, I would just go with third party property (in addition to the mandatory CTP).

    • +2 votes

      Yeah i used to think $10k but now that I'm there i've been thinking $5k seems more appropriate.

    • +4 votes

      Really depends on the premium.
      If premium is only $500 (10% of car value) then its still worthwhile keeping the comprehensive policy

      •  

        Also depends on the excess. If the premium is $500, and the excess is $500, then you're paying 10% in the case of an accident, and a further 10% every year. I definitely wouldn't bother at that point.

    •  

      You also need to weigh up what condition your vehicle is in, and if you would replace it with the same, and any mods, or new stuff like tyres, shocks, etc you've just put on.

      For example on my ML270 I have deleted the manifold swirl flaps. I did it myself but the job took me 2 days to do, its a right prick of a job. If I were to replace my ML270 if I wrote it off on 3rd party (and I would because I think its the best car on the road), I wouldn't really want to have to do that job again this side of a couple of grand. And its a job that does need doing, because the flaps eventually break off and can wreck your whole engine - I was lucky the flap got stuck on the back of an inlet valve when it happened on mine. Others have had smashed pistons.

      Rear shocks are a similar story, they are about a days work on these to replace.

      So although I could replace it and be out of pocket 5k, I would need to add a few more k to get it to the same spec as my existing car, leaving me further out of pocket than the market value.

      And in my case the difference between 3rd party and comp was only $180 last time. AAAAND we had a not at fault claim this year and the perp was adamant that she was in the right, she even went to the ombudsman about it (thankfully we had a dashcam, didn't tell her that though)…
      https://youtu.be/1nkfKUgMijo

  • +1 vote

    1) What's the actual value of the vehicle (therefore how much cover do you need?)
    2) What's the excess?
    And therefore how much out of pocket would you be in a at fault accident versus the savings you'd make with Third Party only.
    3) Can you afford to replace the vehicle at a moment's notice (ie the value in #1 plus Stamp Duty)

  • +4 votes

    Getting a new quote, seems that ~$550-$600 will get us $6000 cover. All 3rd party quotes come in around $250.

    So an extra $300 for comprehensive over 3rd party, for addition $6,000 cover? That's a no-brainer, go with the comprehensive.

    Oh, and FYI for the future - if your renewal comes back a lot higher (or even a little higher), call up your insurer and give them the standard spiel about how you've been a loyal customer, the covered amount has decreased, and your situation and car's parking situation are exactly the same so why the H*** would they increase your premiums? They back off pretty fast and usually only tack on a $100 premium increase if that.

    What price point do you start looking at 3rd party instead of comprehensive?

    When the premiums are about a quarter or a third the value of my car. The value of comprehensive insurance isn't just that I'd get paid out damage to my car, it's also convenience if something happens and I need a car. Even if at that point my car's not worth that much, the convenience factor for me still will be.

    •  

      Yep I agree. Thanks for the tip =)

      • +2 votes

        Check TPP quotes too, some have uninsured driver cover of a nominal value, like $3-$5k if someone hits you and they aren't insured. That changes the tipping point of value.

        •  

          Id like to know which ones.
          Im sure other OBs would too
          Please list here

        •  

          @Amayzingone: from memory NRMA had this cover, but I haven’t had it for several years. You’d need to check the fine print in each policy to see what is covered. Or maybe I’m really confused and it was third party, fire and theft cover.

    •  

      All very good but you will always get a better reaction from insurers by providing a competitive quote.
      No point in threatening people. You get nowhere fast. Nobody wants to help abusive person.
      But suggesting you will move to another insurer on the basis of a cheaper quote and askinmg if they can match the quote ALWAYS WORKS!

  •  

    2008 corolla … Last year we paid $600 for $8800

    Seems like you've fallen victim to a common insurance company trick of insuring for a high value.

    Realistically your corolla probably has a market value of 6k - which probably includes 6+ months of rego and CTP. The rego and CTP get refunded if you have a write-off, so there's no point insuring for these things.

    1 windscreen claim

    You should consider dropping some cover like automotive glass and rental car. They can easily add on $100 to a premium … there's cheap rental cars around and you can get the windshield changed cheap (by getting a used one from a wrecker).

  • +1 vote

    I have an older 2003 Echo on 3rd party because if i get into an accident with another car i'm pretty sure that car will be worth more than my Echo, and if its my fault the other car will be taken care of.

    I can buy another Echo fairly cheaply or fix it myself, I could go no insurance, but I have 3rd party so I'm not in debt in case I accidentally backed into a Ferrari or something… it also depends on how much your car is worth and whether you are handy in fixing it yourself or not.

    If the other driver is uninsured you would have to chase the money up in civil court if all you have is third party, your insurance company won't help you… and there are a lot of "self insured" people these days. Risk takers.

  • +1 vote

    I make the decision based on how easy it is to replace the vehicle. I also look at the value of the car compared to repair costs. It doesn't take much to run up thousands of $ in repair bills.

    If I can't afford to replace, I'd rather take a bit of a hit on comprehensive just in case. If I can afford to replace, third party is the go.

    I am in a position where I trust my driving skills and could repair minor damage myself which also affects the threshold for TPP vs Comp. My current car was valued around $17k when I bought and is insured fully with a cheap insurer because the TPP premiums weren't much different to Comp (<$200). My last car was valued at $8k when I bought it and I only had TPP, but the TPP had either $3k or $5k payable if another driver is at fault and not insured.

  • +3 votes

    Typical Comprehensive Insurance costs: $500 - $900 (cheap), $1,000 - $1,400 (median), $1,500 - $1,900 (expensive)
    Typical Insured Car Value: $13,000 - $19,000 (cheap), $20,000 - $32,000 (median), $33,000 - $51,000 (expensive)

    I usually do the quick-maths of:
    Car Value / (Insurance Cost + Excess x 10)

    Say the car costs $13,000 and the Comprehensive Insurance sets you back $900 per year and the excess is $600.
    That would result in (13,000 / (900 + 600 x 10)) = 13 / (1,500 x 10) = 13 / 15 = 0.87.
    Since the value is below 1.00 then you could say Insurance is not worth the risk, or at the least say it is "Expensive / Excessive"

    However, if the car was valued closer to $15,000, and the insurance costs $800 with $600 excess… then the ratio is 1.07 and the Insurance is worth the risk.
    Or lets say a $18,000 car, with $800 excess, and a $1,100 yearly insurance….0.95
    Or try like a $21,000 car, with $1,000 excess and a $1,200 yearly insurance….1.05
    Or maybe a $26,000 car, with $1,000 excess, and a $1,400 yearly insurance….1.08

    My threshold is usually between 0.95 - 1.05, however your comfort/tolerance level may differ.

    • +2 votes

      So according to your formula you would go for TPP for your $18,000 car……OMG

      •  

        Well, yes if the comprehensive insurance was overpriced…. or better yet I would get a cheaper car until I turn 26

  •  

    I always go for about $1500 excess to keep the fees low. If the car's market value is more than $4-5000 I'd have comprehensive insurance.

    • +1 vote

      +1 on maxxing out your excess

    •  

      I used to go for high excesses… until we had to claim. All that we had saved got consumed in one foul scoop… and because I had a policy of never claiming for the small stuff, the insurance company loved me (aka sucker).

      We don't have high excesses anymore.

      •  

        But they sting you for the small stuff with a higher premium over the subsequent years.
        Insurance is for covering the big stuff, not the small stuff.

      •  

        I think and truly hope that I won't be at fault at accidents more often than once in a blue moon but I had hail damage fixed last year and I was out of pocket $1500.

        But as I've had cars for +25 years I think I'm still ahead in this game :P

    •  

      All very good till you have an accident….
      In the even of an accident your costs would be $1,500 plus the premium of say $600 so $2,100.
      Therefore in effect you are only getting $1,900 for your $4,000 car.

      •  

        Precisely why having comprehensive for such a low value vehicle is of questionable benefit.
        Drive down your excess and the Premium increases dramatically.

  • +4 votes

    I had 3rd party property for my first car as it was worth around $5000. I got hit by another car and the other driver ended up being charged by the police. The other driver's insurer (which was the same as mine) refused to repair my car despite this. I ended up having to file a claim in court to force their hand which was a royal PIA.

    My advice is shop around and get the cheapest (high excess, no extra bells and whistles) comprehensive insurance you can find and save yourself the headache.

  •  

    I ditched comprehensive insurance on my 2000 Avalon, trusty beast that it is, as the premium cost was disproportionate to any benefit I could receive on the value of the car minus any excess.

    I still get 3rd party property to cover any damage I might do to another vehicle, and that includes free fire/theft cover too I think, with Youi.

    As others have said, insurance is about risk, and this one is a no brainer TBH. Cheerz Wabster.

  • -1 vote

    Dear OP its up to you but my suggestion is NEVER!
    You are comparing 2 different policies.
    One provides NO COVER for your car and one provides FULL COVER in the event of an accident or loss.

    Has OP not seen the many posts of OBs who realise how irresponsibloe it was to not have comprehensive insurance after the fact.

    And how many times people admitted fault at the accident then changed thier tune when it came time for the claim leaving OBs clueless as to what to do next.

    And how many times people are involved in accidents and do not have any insurance!!!!

    This is not a cost saving excecise.
    Its exposing yourself to much greater risk of loss, stress and emotional drain in the event of an accident.

    And the difference in cost between comprehensive and 3rd party policies for you is minimal!!!!!!!!!!!!!!!

    Only when you view things this way can you make an educated decision.

    • +4 votes

      What is the point of paying $800 a year for a car worth $2000 so you can get your $2k back less the excess. You could save $2k in around 4 year’s if you don’t get crashed into. Comprehensive doesn’t make sense For low value cars.

  •  

    Just a note on the prices
    Last year - 60% No Claim Bonus discount - you pay 40% = $600 odd
    This year - 40% NCB - reduced - you pay 60% = $900 odd
    Next year - 50% NCB - you pay $750 odd
    People don't realise that making a claim reduces NCB which has a cost
    So you should be expecting your price to rise by half this year and a quarter the year after
    Making your claim costs an excess - say $650 or more if young - +$300 +$150 = $1100 plus
    That said they have jammed it up further from $900 expected to $1K
    You can always shop around - the next insurer didn't pay your last claim and may be more generous
    Then again if the last insurer did a good job and are reliable I would stick with them
    The service of the next one my be terrible when you need it - the cheapies often are

    *NCB typically reduces 2 years unless you pay extra for "protected"

  •  

    not age, value

    sub 30k car i would only 3rd party it

    •  

      haha.

    •  

      OMG! that is like 90% of cars everywhere. If not just wait another 1-2 years and it will definitely be worth less than that (insurer replacement value not private sale prices)

  • +1 vote

    I've always had Third Party insurance, as I've always owned cheap/shitty cars which I can afford to replace.

  •  

    My drive is valued at $15,000. I tend to sell when it's worth maybe 5k. Having never bought cover, I am my own insurer. Yeah I'm a risk taker and careful steady driver. In 40 years of motoring I have saved probably $35k of insurance in today's money and paid out $6k about 5 years ago when I had the only prang that was my own fault. I'm way ahead!

    • +7 votes

      Woah, that's too risky even for me. Good luck and try not to hit a Rolls.

    •  

      I didnt have insurance for 16 years, I kept on getting sports cars where premium would be something silly like $2.5 to $4k. ( grey imports ) I probably would have saved more money. I only got full comprehensive in the last 4 years since my wife is still learning to drive after 3 years & $3.5k worth of driving lessons. She makes me scared everytime she drives. I started taking her to the temple to pray for her license and no accidents :P

    •  

      Similarly, I went 18 years without any property insurance on my vehicles. I finally had a small scrape about a year ago and it cost me $1000 (probably could have gotten it less if I had it repaired myself, but I let the owner just go through their insurance). I'm still way ahead.

      I am actually comprehensively insured now as I got a new (to me) bike and comprehensive insurance is only $200pa, I figure it's worth that to cover myself if I drop it.

  •  

    My comp. insurance is under $500 so I wouldn't consider going without it.. but I guess if it cost me $2000 I may think differently.

  •  

    18 y.o male, $7500 agreed value car (that isn't a turbocharged skyline/wrx/evo) and I pay $500 annually for Third Party Fire & Theft. Driving for almost 2 years, never made a claim. Irritatingly, two of my female friends have both claimed twice each on insurance in the last two years, and both pay less annually for insurance on cars of similar/more value to mine. OzB, find me a deal on penectomy please….

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