Any Point on Keeping a Comprehensive Insurance on Old Car?

Hi,

I would like to ask for some insight as I am not familiar with this topic. I have a mazda 3 year 2005, I am with RACQ and paying almost $70 per month for comprehensive car insurance.

I am wondering if I should drop to third party to save a bit and bring it down to about half the cost. In the case that I get into an accident and it's my fault, wouldn't the value of the car to be too low due to its age that it would be written off anyways rather than getting it repaired with the insurance?

Thank you for your time!

EDIT: From a comprehensive policy at $69.38 I went to a third party at $20.68 ($248.16 per year). I hope I won't start having accidents now …

Comments

  • +3 votes

    My thumb rule: If your comprehensive cover's annual fees is one third the value of your car, maybe you can consider 3rd party only. This means you'll be paying your cars worth of money in 3 years to the insurance.

    If your risk appetite is higher, that ratio can be one fourth.

    In your case, 70*12=840 so if your cars valued between 840*3=2520 and 840*4=3360 then you should think about switching.

    •  

      Thank you for the advice, I suppose it's time to do some price comparison on a new policy

    •  

      +1
      But there's a caveat. This assumes you can afford to stump up the cash for a replacement vehicle in the event that you do write off the car.
      If you can't afford to replace the car, and are not happy to drive around in something worse (or at all), then the value equation changes.

      But OP, ~$850/year for insurance on a $5000 car is a rort, have you shopped around first?
      For comparison, we're paying $700/year on a ~$15,000 2018 Elantra with AAMI

      •  

        With how much I drive my car atm I suppose I won't get any accident anytime soon (touch wood)… it's kinda weird that in USA they get a part refund on their policy because of covid (less driving causing less accident) but it's not implemented here.

        I took comprehensive as I wanted the "most secure option" if anything happened … I had a previous car that cost me thousands in repairs and my gf (we are sharing the car) just had an at fault accident before we purchased that one.

        I see that I overpaid way too much (thanks for sharing your figures), I hope I'm not locked in a policy as the last time I claimed anything was more than a year ago about someone breaking my window at the bus stop

      •  

        But there's a caveat. This assumes you can afford to stump up the cash for a replacement vehicle

        You could adjust your excess to account for that contingency. Sometimes there's good premium breaks with a 2k excess.

        •  

          yeah, good point.. My premium would be at the maxxed out excess.

          •  

            @scubacoles: Maxing the excess on a cheap car can almost negate the benefits of comprehensive. In the event of an incident you’ll have cost the premium plus the $2k excess for a cheap car.

            •  

              @Euphemistic: Yep, agreed.
              I still think the Premium sounds high.
              I drop my cover to 3rd party at around $5k vehicle value, so OP seems to have a similar risk vs reward balance to me.

  • +1 vote

    3rd party ( my opinion ).

  • +2 votes

    NO just get thirdparty fire and theft

    •  

      Would that be worth it? I don't usually see people burning cars and I have a garage for the night

      • +1 vote

        thirdparty fire and theft

        Insurance covers the third party (whether it be a power pole, Bugatti etc) and not your own vehicle (except for fire/theft).

      •  

        True if you keep it in garage then doubt anyone could steal it but if it is older car easier to steal than newer cars..i guess demands on where you live etc

  •  

    It's about how risk adverse you are.

    Also, if you've got third party and you're not at fault your insurance company may not touch your car (check your PDS) and you'll have to go through their insurance yourself. If you had comprehensive, your insurer will take care of it all and it could be worth the extra piece of mind at the end of the day.

  • +2 votes

    All depends on the prices of the policies.

    SinL asked me to get quotes, found on a 2005 Courier for her that 3PP was only $20 cheaper than comprehensive, so a no brainer to go with Comprehensive.

    Also shop around, policies also can be cheaper if you go for a limited number of KM's a year, you can often play with this figure. Also if you insure with same insurer each year, then they take the first year as starting, then automatically add the same number of Km's the next year. So in effect you roll over the unused kms each year.

    Of course depends on age of drivers and if you can avoid the dreaded under 25-30 rates

    • +2 votes

      This.

      I've never seen a 3PP policy that was sufficiently cheaper than the comprehensive policy. My definition of "sufficient cheaper" is a few hundred dollars, say $200 on a $700 policy. Most of the time it's just a $50-100 saving, so I might as well get comprehensive.

      • +1 vote

        Not always the case. I have an older Audi that is quoted 2400 pa for comprehensive and 400 for third party.

        The difference can be quite staggering.

        •  

          Not always the case. I have an older Audi that is quoted 2400 pa for comprehensive and 400 for third party

          It's true, that there's too many variables to insurance premiums to make generalization, but if you put your mind to it, you can probably find a comprehensive policy for under 1k.

          Will the $1k comprehensive policy be better than your $400 3PP policy? Who knows.

      •  

        where did you get the quote? my third party has always been around $300 whilst the cheapest comprehensive is around $1000 mark

        •  

          where did you get the quote?

          Pretty much everywhere I can think of - Suncorp brands, IAG brands, Allianz brands (through all their different sales channels) … few of the smaller companies BudgetDirect, Youi, etc

          my third party has always been around $300 whilst the cheapest comprehensive is around $1000 mark

          My comprehensive is around the $500 mark and 3PP is only a little cheaper. Hard to say whether this is because I did a more thorough search for my comprehensive policy or your comprehensive policy has more risk loading.

  •  

    To me it is always worth it, I don't like driving a car with scratches and dents and take pride in keeping my vehicle clean and tidy. Also Mazda 3 holds its value very well, you should still be able to get at least 5k for it. Only you can decide but to me it is worth it unless the car is worth less than 3k. Usually the difference between third party and comp is only a few hundred $.

  • +1 vote

    Third party if you can afford to replace the car with cash or go without for a while in the event that you crash and write it off, or someone hits you and is uninsured or won’t pay up.

    Edit: you CANNOT afford to ditch third party property.

  • +1 vote

    Can you afford to replace the car if it is damaged beyond repair and you are at fault.

    I put our 2005 Honda Accord Euro on TPP last year as it had been in 3 hail storms and we didn't claim for any as the car would have been written off and it was mechanically perfect and safe to drive and the replacement would have been a mystery. To sell, the Honda is worth a can of beans and a wet fart but to keep as a reliable, safe means of transport it's worth is a lot more (to us).

    My kids were paying the premium but I think it went from $1500 down to $450.

    •  

      If it comes to replace the car, it will take a toll on my wallet for sure but after leveraging the risk (I don't use the car much) and the cost, I believe that third party would be the way to go. I had comprehensive for 3 years and haven't claimed a thing.

      I have the same situation for the vehicle, car is a 2005 model, can't avoid having bumps and scratches around (especially when you let your girlfriend drive in shopping malls, where everyone pushes their trolley at your car and open doors on you). I don't think anyone would buy this car even if the engine is mint and interior being in great condition, so I'll prolly run it to the ground or get it as exchange when I buy a new one.

  •  

    Go and get more quotes, we pay less than that on a 2015 Hyundai i30 insured for 15k.

    My 2005 Astra is a touch under $400 for fully comp and i would save less than a $100 a year to drop it down to third party.

    •  

      I suppose I haven't look hard enough … I did the main players and i always reach at least the $550 mark on comprehensive. Who are you with? Or maybe you have a few vehicles or house insurance with them making a package?

    •  

      it depends where you live. I'm a great insurance risk and have 60% NCB and park in a garage. $9k cover on my Skoda is $800+ no matter who I try. That's life in the inner city.

  •  

    I used to have third party fire and theft. I stupidly left my car unattended at a railway station overnight. When I came back to it, it had been smashed up and parts removed and thrown around. I was not covered by insurance because my car was not set fire to and it was not moved (stolen). Since then, I've always held comprehensive insurance.

    •  

      When it costs a few hundred per year, difference in premium, and the car is not worth much, and you can afford to replace the car in the j likely event something bad happens third party works out for some people.

      How many people have been paying hundreds every year for ages and not made a claim at all? I’ve owned and driven cars since last century and Have not had an incident that would have cost the difference in premiums for all those years. However, I have had comprehensive for cars that were worth more than I could afford to replace, third party at times too.

      •  

        I did not find it easy to replace the car at the time, the cost (while relatively cheap) was around 10 years of paying for that third party fire and theft insurance. It wasn't worth it to me. I'd rather know that all I have to pay if I need to suddenly replace my vehicle will be the maximum of the excess cost.

        •  

          Yeah. It only takes one incident to wipe out all those savings. It’s up to the individual to work out if the risk is too much.

  • +1 vote

    Am important thing to consider is the hassle of being involved in a not at fault accident. Your insurance company will deal with it for you if you have comprehensive.

    As an example a friend is fighting a rental company whose car overtook her when she turned left. Although she's not in the wrong it's a big mess to sort out.

    What's that worth is up to you.

    •  

      This. If you get a cheap comprehensive insurance the insurer deals with all matters leaving you stress-free.

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