Comprehensive car insurance is the star of insurance, being the ideal insurance, the one that offers the most coverage, but, logically, the more protection, the higher the price and, as the car gets older, it becomes too expensive and perhaps It’s not worth it that much. At this point, when is it worth taking out comprehensive car insurance and when should we switch from comprehensive insurance to excess or extended third-party insurance?
From GexBrok | Member of ETL GLOBAL we analyze the sales and disadvantages of comprehensive car insurance, as well as when it is worth (or not) to take out this type of car insurance.
Before continuing, it is important to know that the insurance premium is calculated based on the risk that the policyholder has of causing accidents and damage. The lower the risk, the lower the price, but not all companies calculate the risk the same and hence the price differences.
Comprehensive car insurance the ideal insurance
One way to make car insurance cheaper is to change the policy to another with less coverage, although it is essential to carefully check whether the contracted coverage covers all our needs.
Within this operation of cutting coverage and lowering the price of insurance, there is one insurance that is untouchable, which is mandatory, but then there is a wide range of combinations. Obviously, the more coverage, the higher the price of the policy will be, but comparisons, and a realistic analysis of the needs you have behind the wheel, can help you find a policy that is adjusted in price without losing too much quality in protection.
In this sense, the ideal car insurance is comprehensive, without a doubt: it covers mandatory civil liability, offers travel assistance and legal defense, includes driver insurance, and coverage for personal damage. In contrast, third party insurance only covers mandatory civil liability, travel assistance, legal defense and driver insurance.
Comprehensive insurance has , however, two problems. The first, which is the most expensive modality, as it is also the one that offers the most extensive coverage. Logically, if you can afford it, it is the most recommended insurance for someone who uses the car very frequently and has good driving behavior. The second problem with an all-risk is that it does not pay off when the vehicle gets old. It is a bad decision to continue with comprehensive insurance after the car reaches its fifth anniversary and almost crazy to continue like this when the car is more than six years old.
The deductible reduces the cost of insurance
If comprehensive insurance seems too high, you can opt for third-party insurance reinforced with coverage that you consider inalienable, even if you have to pay for it. Or opt for an all-risk with deductible . Do not forget that the cheapest insurance is the one that includes a deductible, since it means that the insured will pay a part of the coverage if they need it. If you decide to bear the costs of small repairs yourself, the franchise can help you save a lot…
In the event of an accident, the driver must be responsible for an amount set in advance in the policy. The rest, up to covering the total cost of the damages, is borne by the insurer. The deductible can be given in both third-party and comprehensive insurance. The normal thing is that it is 300 euros, although there are insurers that impose amounts of 1,000 euros. If you are interested in the deductible, before signing the contract it is advisable to carefully assess its cost to gauge whether it is worth it compared to insurance without it.
Why doesn’t comprehensive insurance pay when the car is more than five years old?
Aside from factors such as age (younger drivers are penalized compared to others) and accident rates (a good driver will always pay less than someone who regularly has to go to the workshop to have their car repaired), by nature a All risk will always be more expensive than another that only covers third parties, even if it has a deductible.
The question you should ask yourself is this: is comprehensive insurance always the best option? The answer is no, especially after the car’s fifth year of age. Because? If a fully insured car suffers a total loss, the compensation that the insurance company will pay will depend on the market value of the vehicle, which is very different from the market value that the same car could achieve.
Market value is understood to be the market sale value of the vehicle on the date of the accident, generally 20% lower than the purchase market value and which decreases as the age of the vehicle increases. The maximum compensation for a report of personal damage decreases dramatically with the passage of time, since it is linked to the market value of the vehicle, in other words, what a dealer would pay for it.
For this reason, the age of the car must be taken into account before deciding on comprehensive insurance. It is profitable, although without forgetting that it is the most expensive option, to insure a new vehicle at all risks until the fourth or fifth year of life. After the fifth year it is no longer worth paying the high fees for this type of insurance.
The older the car, the less interest there is in comprehensive insurance. The premium to pay for car protection skyrockets. On the other hand, the compensation to be received in the event of a total loss decreases over the years.
Conclusion: the most profitable thing is to insure a new vehicle at all risks, even if it is the most expensive option, until the fourth year of the car’s life. From the fifth year onwards it no longer pays off.
Basic or extended third parties, the best alternatives
If you do not take out comprehensive insurance, what other options are there? Obviously, you always want maximum protection without the price skyrocketing. The best all-risk options from the fifth year of age of the car are a basic or extended third-party policy, to have coverage against broken windows, fire or theft.
We would only maintain all risk from the fifth year if there are accumulated bonuses for good accident rates from previous years that significantly reduce the bill that you will have to pay from then on, and for subsequent years for car insurance.
Comparisons are always profitable
Comparisons are never hateful, at least in insurance. And also in many aspects of life. The offers and promotions can be very attractive, but you must look at them carefully, lest a very low price in the first year later hide much higher rates in subsequent renewals.