How to insure an old car -- for a new driver

Getting older means doing all those things you thought you never would. In my case, buying a washing machine (wasn’t the launderette good enough?), burying my parents (whom I’d assumed would live for ever), and now buying another car – for the kids to learn to drive.

When they were small, we lived in a street where occasionally the middle-class mums and dads would do just that. You would spot them driving up with a brand new – probably bright yellow,, or other youthfu colour -- VW Golf late at night (the Golf is/was your average mum and dad’s dream of a “safe car”), then decorating it with ribbons, etc. In the morning Cressida (vel sim) would emerge from the front door, affect astonishment, kiss mum and dad …and drive off.

Never would that be us, we said.

Well it hasn’t been, quite. We haven’t done the brand new thing, nor the ribbon thing, But having discovered how much it would cost to insure our new-ish Corsa for a 20 year old male learner, we thought that the second car idea might me cheaper.

Maybe it has been….

But, all the same. insuring a seven-year-old, 1200 cc, un-sexy car we bought for under £3000 for a male learner aged 20 and a female learner aged 22 and a safe middle-aged lady professor hasn’t been cheap, or hassle free.

I started by ringing the AA, who gave me by phone a quote of £1600 fully comprehensive. More than I fancied paying, and more than half the value of the car. Everyone (even the AA, when I demurred a bit) says, go on the web to get a quote, as there are great discounts. Which is what I did.

Frankly it didn’t seem to me worth the hassle or the time. Leaving aside the number of times the whole thing crashes  and you have to start all over again, the questions the websites ask you never quite match the answers you have to give them. Claims within the last five years? Yes, I was bumped in a car-park a few years ago, but I cant exactly remember when or what the cost was. So do you just invent it? Well no, because of all the obvious consequences, and threatening notices about “incorrect information”. So what?

All the same, I persevered for a little with a variety of companies, and came up with yet more Mickey Mouse figures . . . £3600 from the Co-op (who, I had been told, were good for young drivers -- maybe I entered something wrong). So, a couple of hours of surfing later, I went back to the AA, this time on the website (to qualify for the on-line discount as the phone operator had recommended) and got a figure of £1200-ish for third party, fire and theft.

At this point, it told me that I could phone to close the deal if I didn’t want to pay on-line. Feeling exhausted, I decided to do this the next day. But the AA wasn’t having any of that. They rang almost straight back and left a message on the answer machine. I returned the call as instructed, told them not to ring again as I would call the following day. This didn’t stop a few more phone messages urging me to sign up.

The next day I did exactly that, by phone (having ascertained that removing the entirely inexperienced 22 year-old female would only bring the price down by £100 -- which tells you something about the perceived risk factor of young men). But the web office of the AA didn’t quite catch up with the payment, and have since e-mailed me more than eight times, reminding me of their marvellous offer.

I don’t know how much money they think they might make out of me. But my advice for anyone else doing this is: don’t waste time on the web, and don’t leave them an electronic footprint -- do it all by phone.

Comments

[car_insurance_quotes_online]

Fantastic information on your post. I will be passing this along to my readers later today if thats ok with you. Keep up the good work!

Michael

Get Fast, Free Car Insurance Quotes Here!

[car insurances]

a very nice and informative article, and even more so the comments, especially the one by Mary about the No-fault insurance system in the US...

[Tony Francis]

In the US, the era of automobile insurance caused a radical shift from "Insurance as Indemnity" of the insured to "Liability to the plaintiff". Under the former scheme, insurance was viewed as having no legal responsibility to a third party plaintiff in an action in tort. This led to many injured parties being denied compensation for many reasons, including, but not limited to the finding of bankruptcy by the defendant. With increasing automobile accidents, there was great outrage, and many states legislated that insurance should be based on liability in tort.
http://www.en.wikipedia.org/wiki/Indemnity
http://www.en.wikipedia.org/wiki/Liability_insurance
A lengthy (50 page) discussion of the ills of a tort based system involving remedial actions for automobile accidents comes from the University of Memphis (Tennessee) Law School:
http://findarticles.com/p/articles/mi_qa3843/is_199810/ai_n8824813/pg_1
Insurance companies are among the prime holders of US equities, securities and money instruments because they are required by law to have large capital reserves. Most years, the profit from these holdings outweighs any loss from from the insured:
http://www.iso.com/index.php?option=com_content&task=view&id=2274
Most increases in insurance rates are precipitated by market losses, and not claims. There has been a movement to take autmobile accidents out of the pure tort system, and place it in a scheme similar to worker's comp. This is a form of capped liability with sloppy rules of evidence and liberal disbursement policies, akin to Administrative Law. Perhaps the most prominent of these is called "No-Fault Insurance":
http://www.en.wikipedia.org/wiki/No_fault_insurance
http://www.en.wikipedia.org/wiki/Vehicle_insurance
The removal of car accidents from pure tort law is favored by the Insurance Industry, since the potential damages are substantially decreased in most cases. There is an avoidance of trial costs. The "Contingency Fee" system in the US is the standard. It has been shown that any fee less than 33% is not financially viable, and has a chilling effect on litigation. A similar finding of 25% has been established Administrative Law cases (such as worker's comp, social security, federal disability, etc.). Contingeny fees were considered unethical in the UK, until 1990. An attempt to introduce contingency fees in the UK led to laws that were confusing. Needless to say, the UK now appears to have adopted the "US Jungle Tort" system:
http://www.en.wikipedia.org/wiki/Contingent_fee
In Kansas, the No Fault system works well, where juries rarely think anyone is injured in an accident. In New York and Florida, professional "car wreckers" are said to cost the insurance companies $1 billion a year.

[megafauna]

Heard as word of mouth.

In Canada's Vancouver BC they have public auto-insurance and in Ontario the free-market competition to keep the price down. They did a study to compare the two and found that in BC people were paying an average of 45% LESS than us Ontarians.

Insurance is a scam, I wish you the best of luck but in the end I've always found we loose and the plutocrats win.

As a side note: some universities offer significant discounts to your rates, I assume that your children are students? Have them check with the student union, in my case though it only affected alumni.

Great blog.

[SW Foska]

Tony, it sounds like my car is no longer relevant. But to answer you quickly: a) Streamlined and erotic K11; b) yes; c) no; d) no; e) both.
Mary, before I bought the Nissan two years ago I had been looking at Corsas as I had once hired one and liked it. But a sagacious friend advised me against, saying that their nippy acceleration and handling makes them a target for young male joyriders. This surprised me, as although they are indeed nippy and neat to handle, I had been previously told, albeit in a different geocultural zone, that they are 'a hairdresser's car', i.e. a bit naff (an attribute that actually appealed to me, as indicating low theft rate). But if the former is true, it could explain the hefty insurance.

[dr venables preller]

I would add that the buyer of SWFosca's Micra could in my view have an attractive motoring concept ready to go.

In my experience, buying a reasonably low mileage (or well maintained high mileage) car when most of the new price has been depreciated by time can give a relatively low cost motoring experience when dividing all one's costs by the mileage over the time the car is in one's ownership.

At this level, what might be expensive repairs for a newer car can enable use of cheap recyled parts from what used to be called scrapyards. (eg: replacement battery £5 to £10).

When the costs of passing the next MOT starts to look excessive, it can be time to sell and buy a similar type of vehicle.

Apart from the reduced annual depreciation of an already depreciated vehicle, there can be less anxiety of the type which can attach to brand new possessions.

Mathematicians can probably visualise a section of the depreciation curve which has almost flattened, although still a distance from 'falling over the cliff' to scrap value only. (Although bringing scrap value to account or doing 'Haynes' Manual' maintenance can be a profitable learning experience for offspring considering Engineering as their subject, in tune with a sound future career.)

[Tony Francis]

Dearest Foska: Is the Nissan Micra a "Boxy But Classic K-10"; or a "Streamlined and Erotic K-11"; or a "Star-Trekkie Extravaganza K-12"? Does it come in a particular color? Is it named Myrtale? Does it have a different name? And is it washed or unwashed?
http://www.en.wikipedia.org/wiki/Nissan_Micra

[mary]

Damn...Foska, if only you'd said before I bought the second Corsa, we could have done a deal!

[SW Foska]

Internet comparison sites - and a willingness to shoulder some burden as per the Ven. Propellor's estimable counsel - did me good on home insurance, but in matters automotive I had the same experience as Prof. Beard, ie. estimates at least double what I already had.
Mary, I'm looking to upgrade as my Nissan Micra is no longer suitable for someone of my towering distinction. 9 years old and numerous superficial blemishes but low mileage (53K) and generally very reliable: perfect for a learner to mess around with. 6 months tax & MOT. 5 doors. Generally reputed in insurance circles. Yours for £1200.

[Paulo]

Dear Mary

About cars. A year ago I suffered an accident which required a total hip replacement. The surgery and nursing were wonderful, and I recommend that you come to South Africa if you require medical treatment. After the surgery, I was unable to drive a car for two months. So I found a wonderful, obedient taxi driver, and even now do not want to drive a car ever again. He will even do meals on wheels when called for. I mention this because that of course is the answer to all your problems. I do not have to pay for road tax, or insurance, or petrol or anything except what the taxi driver requires. And very important here, I will not be held responsible in case of an accident.

Britain has been ruined by the motor car. If it were to be that nobody could own one except a professionally qualified taxi driver
the whole country would benefit. It might even be good for the environment.

I know not all taxi drivers are as nice as mine, but some of them are quite interesting to talk to.

As it happens, Timothy, because that's his name, wanted to buy my old car to use it as a second taxi. A Toyota, much like yours by the sound of it. Of course he didn't have the cash, so I gave it to him, in return for free taxi rides for the next couple of years.

[dr venables preller]

Mary, it's worth thinking about whether you need more than the insurance cover (against third party claims) required by law, and whether in the event of a claim you could afford to contribute an agreed excess.

A comprehensive premium in this case of more than half of the car cost may be an expensive way of having it repaired should damage be caused by the car driver rather than a third party.

Insurance for risks which you yourself can cover is likely to be more expensive than probabilities would otherwise indicate, as the premium has to cover a profit for the insurer and broker commission as well as a contribution on account of other customers who have higher cost claims than average.

By contrast, if the driver knows he will be paying a moderate fixed part of a claim which is his fault the mind can be more concentrated into the desirable safety aware mode.

A local insurance broker perhaps specialising in University customers might be able to find lower quotes and advise if your occupation of University Professor has other classifications which might appear in less risky groups, and could also advise what reductions could be gained from different levels of excess.

Whilst at university I found I came under a classification as a government worker on account of a stipendary post which I held throughout as visiting organist of an establishment maintained by the Home Office.

Costs could be spread if several named others were interested in sharing driving practice use.

[Irene]

Friends here in the U.S. recently won a Mercedes Convertible in a church raffle and thought they'd keep it for fun spins despite the outlandish amount of tax they had to pay on it. But now their 17-year old son has started driving, and when they looked at the increase in insurance premiums for the family, they regretfully decided they would have to sell the Mercedes.

OTOH, students' car insurance premiums get reduced if they can show good grades in school/college. Presumably, that makes them more responsible . . .

[abc]

Does an electronic footprint to a Cambridge professor replace an autobiography, I wonder? I'm mourning it, so much achievement and now I can't. You'll have to write it and cut the slack, MB.

[nick]

What young person can seriously afford £5 to £10 a day for car insurance? The result of course is a huge number of uninsured drivers on the roads.

[Candadai Tirumalai]

The situation is not all that different in the United States. One father told me that when his son starts driving the family car--he is now 10 but can get a driver's license at 16--his insurance premiums will shoot up sharply.
Regretfully there have been some fatal teenage crashes recently in the Washington D.C. metropolitan region.