Is it cheaper to insure a new car or an old car?

By Chad Luckhoff

We look at the factors that determine your insurance premiums and whether the vehicle's age plays a factor or not.

Which one is cheaper to insure? An old car or a new one? It seems there are many conflicting stories doing the rounds, scaring people into believing that their chosen car is going to be a nightmare to insure.

Yes, insurance is one of those grudge purchases. You spend hundreds of Rands every month and what do you have to show for it? Nothing.

Or so you think...

Insurance is the difference between financial stability and complete ruin. It helps safeguard your finances and your current lifestyle in the event of something going wrong. An underinsured car can become nothing more than a costly paperweight if it's not insured properly.

So which is cheaper to insure? A new car or an older one?

Unfortunately, there is no hard or fast rule here. The answer isn't a simple yes or no. Insurance companies will take a look at various aspects of your car and calculate the premium accordingly. It is totally possible to get a cheaper car costing more to insure than a new car – it all has to do with a multitude of factors.

The cost of repairs.

The main concern is the availability of parts. Sure, your 1992 Opel may only have a market value of R15 000, but that doesn't mean that the parts are readily available. This is particularly true for scarce and uncommon cars, particularly sports cars and imports.

The insurance company has to assess whether your car will be expensive to repair or not. It has less to do with the value and focusses more on the cost of potential repairs.

If parts have to be flown in, your premium could be rather high. This also works against you in the event of a major accident as the sum of the parts required could push the claim into the 'uneconomical to repair' bracket.

Weighing in safety features.

While it may help prevent a nasty accident, safety systems such as ABS and traction control do not help lower your premiums. While the systems work to mitigate the damage, the primary concern still remains the cost of repairs.

With this said, airbags have been known to be the cause of a vehicle being written off. If enough airbags deploy, the cost of the repair can be pushed into the realm of uneconomical to repair, with several interior panels needing replacement along with the exterior parts.

Risk profile.

Another factor that determines your premium is the risk factor. This is of both you and the car, as well as its intended use and storage habits. Younger drivers will pay more as will owners of cars that are deemed to be high risk to theft, break-in or hijacking.

The area where you stay can influence your premium along with where and how the vehicle is parked during the day and at night. The safer the area, the lower your premium.

Technology at play.

Modern cars, even those in the R150 000 – R200 000 range, often have sensors and intricate lighting systems to help make life easier. This technology is expensive to replace. Where an older car without this technology may just need a bumper and headlight replacement, the more modern car may need several sensors, brackets and clips that will need to be replaced.

Cars that have semi-autonomous driving systems (and some pre-safe systems) utilize cameras that are mounted on the windscreen. These windscreens are considerably more expensive to replace and may even be hard to come by.

The choice is yours.

If you drive an older car that has been paid for in full, you have the option of selecting various levels of coverage. You are able to insure it for fire and theft or even third-party only, which won't cover your car, but will ensure that the car you bump into is covered.

When purchasing a new or used car on a finance agreement, you are required, by law, to keep the vehicle comprehensively insured at all times. This safeguards the bank's investment and is mandatory.


Conclusion.

There is no definitive answer to this question and each case has to be examined on its merits and faults. A R200 000 Nissan can be cheaper to insure than a R900 000 BMW and at the same time, a R60 000 Toyota can be more expensive to insure than a R300 000 Hyundai. It all depends on the car, the risk profile and the age.



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