Reduce Coverage On Older Cars

The road accident statistics for South Africa are among the highest in the world. This has tended to drive up the cost of vehicle insurance premiums. Even those who drive older cars are not exempt from insurance premium pressure, and it is the wise driver who finds ways to reduce coverage on older cars.

Among your many possessions, your car is subject to probably the fastest rate of value depreciation, year on year. Indeed, when you buy a brand-new vehicle, it immediately depreciates in value by at least 20 percent the moment you proudly drive it away from the dealer’s showroom; every year thereafter it may depreciate by a factor of around 15 percent. Yet, you may wonder why the vehicle insurance premiums remain steady or might even rise.

With an older car, the assumption that the highest risk to it, is that it will be stolen will no longer hold true. Older cars seldom attract thieves. The premium cost on cars, particularly older vehicles, is determined more by their probable cost of repairs rather than its actual value. And as the accident rate rises in South African cities, the likelihood of car crashes and, therefore, extensive vehicle repairs will also increase. There is resultant damage to your pocket as car insurance premiums become stiffer.

There are some measures you can take to reduce coverage on older cars.

Consider doing away with comprehensive vehicle insurance cover. This should be evaluated in relation to the value of your car (of which you should always be aware). The type of insurance you purchase should be determined by the car’s replacement value. Comprehensive motor insurance is expensive because it covers both your car and damage to third parties. The insurer has to prepare for possible claims from third parties and calculates your premium to reflect this risk accordingly. If your car is old, your premiums may be higher than the vehicle replacement cost. You could lower premiums on your old car by going for a restricted scope of cover to “Third Party only” and the like. You can also consider eliminating added benefits which may not matter much anymore, e.g. roadside assistance, hail damage, etc.

If you’re an older driver, you could ask for applicable discounts. There are insurance companies that tailor vehicle insurance policies for drivers over the age of 50. You are assumed to be a more experienced and more careful driver at that age, and hopefully your claims record will prove the assumption. The greater experience is given just reward by lowered insurance premiums.

Make sure your insured value is equivalent to the value of your car. Most insurance companies will renew your vehicle insurance using the original purchase price as basis for calculating premiums. Few insurers or insurance brokers will have the incentive at renewal time to remind you that the insured value on your car may be reduced since its value has decreased. It will entirely be your responsibility to remind them about it on every anniversary date of your policy.

Select the highest excess within your means. Setting a higher voluntary excess is, in effect, reducing coverage on your old car and this can lower premiums significantly. If you have a no-claims record, protect the corresponding bonus by paying for small amounts of repair, particularly amounts below your voluntary excess. Insurance savvy people say the most effective way to cut premium cost is to qualify for a no-claim bonus and protecting it.

Check for items covered in the policy that may no longer be there. There may be items specified in the policy, like a car radio, that you no longer have in your old car. Reducing coverage on old cars can also mean, eliminating from the covered items, those that are unnecessary or have since been removed or have been rendered non-operational.