As cheaper the car is, the car insurance is cheaper?

Nemama

Registered User
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74
Hi,

I've been told by a broker than new cars pay less car insurance fees because chances of breaking down are lower than a 5, 10 or 15 years old car. This makes sense.

However as less value you give to your car, less insurance you would pay, that's right?

Thanks
 
It doesnt make a lot of difference and heres why.

If you have comprehensive insurance and you total the car, the insurance has to pay out to replace the car.
Depending on the age and type of car this will cost between 500 - 50000

If you hit a pedestrian and they end up in a wheelchair for the rest of their lives, the payout could be millions,

Therefore, cost of insuring the car is a lot less than the cost of insuring you as a driver.
 
Insurance generally doesn't pay for break downs, as Huskerdu says, the most costly element to insurance companies is what they end up paying out to the other party for personal injuries.

People tend to be a little more careful with newer cars, also braking and safety systems are a lot better in many cases, so newer cars tend to be involved in fewer accidents.
 
I've been told by a broker than new cars pay less car insurance fees because chances of breaking down are lower than a 5, 10 or 15 years old car. This makes sense.
I beg to differ. It makes no sense, unless you misunderstood the broker or the broker is lying.

Insuring your car for mechanical breakdowns is optional - in other words you can ask to have the clause and the cost omitted from your policy. If you have a new model car it makes no sense to pay this additional cost anyway because some manufacturers, e.g. Hyundai, now offer 5 or more years of unlimited mileage warranties against mechanical breakdowns, including vehicle recovery and Homestart (if the vehicle breaks down on your driveway).
 
I've been told by a broker than new cars pay less car insurance fees because chances of breaking down are lower than a 5, 10 or 15 years old car. This makes sense.

If my Broker told me this, I'd be looking for a new Broker!
 
@Nemama
Ravima was quoting your post, so you're agreeing with yourself here.

Breakdown cover is a relatively small part of insurance cost. You can buy breakdown as a complete standalone policy. AXA for example charge the same for a new car as a 10 year old car. Over 10 it increases rapidly.
 
As I have understood it from insurance underwriters the premium reflects the bundle of risks represented by each individual policyholder i.e. the third party aspect and or the fire and theft aspect and or the accidental damage aspect.

They always tell me that the third party dimension to a particular risk is the outstandingly highest hazard in terms of potential financial liability and that the own damage dimensions are almost irrelevant by comparison. They also say that for the same reason the value of the car does not really matter up to a certain level and that reductions in value for an older vehicle do not really make any difference to pricing.
 
As cheaper the car is, the car insurance is cheaper?
Not necessarily.
E.g. when renewing my car insurance I tried reducing the value of the car from €11995 to €10000 (which is probably still more than it's actually worth) and the premium went UP.
(It was at €11995 last year because just going the extra fiver to €12K bumped the premium up significantly!).
I suspect that it all depends on the specific insurer's actuarial criteria and risk spread.
E.g. if an insurer already has "too many" €10K cars insured then they might charge more than for cars in other (higher) valuation brackets.
As ever it's almost impossible to tell a prior in the general case what impact specific data might have on a quote and you simply have to shop around as widely as possible and justifiable.
 
I bought a new car circa €20k in January this year. My old car was valued at €4k. My insurance was about €40 cheaper on the new car.
 
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