Comprehensive vehicle Insurance & Monthly Costs
Comprehensive Vehicle Insurance Versus Third Party & Dealing with Monthly Costs.
Being a young person with a car is sometimes very difficult financially.
It’s a period in your life when you are making the least amount of money you will ever make but the costs for you to exist are ridiculously expensive.
There is no getting around the fact that you must very honestly work out your true monthly costs.
Force yourself to be brutally honest with the fixed costs you have every month.
Once you truly understand the fixed costs you are facing each and every month, you can then determine if there’s any wriggle room for entertainment.
It might be that in order to keep a roof over your head and be insured, you might have to stop spending around $15 per day on iced almond milk lattes.
Who knows, you might also have to think of some good excuses to avoid going to the pub after work with you mates on Friday afternoons and spending $8 on a beverage you can have at home for roughly $2.
If you have taken the plunge and moved out of your family home, you will most likely be paying rent.
As if rent wasn’t enough, then you need to pay for power and water, groceries to survive and then of course, there is the small matter of buying a car and then all the ongoing costs that come with it.
You really need to be anchored in your expectations about what type of car you actually need rather than what you occasionally think you might need.
You will need to devote a significant amount of time to researching all the vehicle related costs you might be up for. This will help you determine what type of car you can afford. Once you’ve developed a budget and know the maximum vehicle related costs you can afford, before increasing your existing financial pressure, you need to stick to it.
Comprehensive Car Insurance for a 19yr old
In my opinion, one of the most unfair costs for those under the age of 25 is the high cost of comprehensive motor vehicle insurance.
Insurance companies, seemingly, prefer to paint all young people with the same brush, regardless of how responsible, well-behaved, educated, or mature the young individual is.
To learn some exactness of how bad the problem is, I did a lot of online research and in readiness, I wrote down the following criteria to be used, not knowing what I might be asked:
1. I’m a 19-year-old male.
2. I work part-time and have a perfect driving record.
3. I got my drivers licence age 17.
4. I’m seeking comprehensive vehicle insurance.
5. I used a couple of different Make/Model combinations.
6. Only used the year 2017.
7. Estimated worth of $18,000.
8. 4cyl petrol engine with a 6 speed automatic gearbox.
9. 5 door hatchback.
10. No finance owing.
11. No modifications of any type have been made to the vehicle
12. The car is in very good condition.
13. I require excess free windscreen cover & roadside assistance
14. Hopefully no more than $500 excess.
15. I drive the car around 15,000 km per year.
Using all this information, the cheapest I can find was $260 per month.
The other thing that came to mind was how a lot of people believe that having your first car in your parents’ name is preferable. In this scenario, the child gives the parents the money and the car is purchased in the parent’s name. The car would also be registered and have compulsory third party and comprehensive insurance in the parents name.
The parents then need to stipulate that the child drives the car on a regular basis, more than 24 times per year I think it was.
I’m not so sure that option is any better to be honest and here’s what I discovered online.
For all of the same information, a 55-year-old male parent who will have one 19-year-old male driving the car more than twice a month will pay $279, so there is hardly any savings to be enjoyed from trying to abuse the system anyway.
I dare say that the insurance companies became very aware about this type of behaviour a long time ago. You are far better off to answer the questions correctly and honestly and just shop around using the truth only.
After all, if you were to be dishonest with answering the questions and then an accident or theft occurs, the truth will eventually be revealed, and you could find yourself in a lot of financial and possibly legal trouble.
As it turns out there is a massive difference in costs when you compare comprehensive vehicle insurance between 19 & 55 year old males in Australia.
Using all the same vehicle and driving specifications used for the 19 yr old I did some considerable research.
The cheapest deal I could find for a 55yr old male to have comprehensive insurance for the same specs, with no younger people driving the car as well as excess free windscreen and roadside assistance, was $97 per month, thus the 19 yr old will pay nearly 3 times more than a 55yr old.
Finally, I wanted to see if the costs situation changed significantly for comprehensive vehicle insurance for a 19yr old using a very different vehicle.
I used a few different Make/Model combinations for 2014, 4cyl turbo diesel, fuel injected, 5 speed manual gearbox long wheel base Van.
It had no finance owing, was in very good condition and was to be used for both private and business purposes. I used that is was worth $20, 000 and that I drove 20,000 km per year as the driving average.
Other information I used was that I parked under carport at night and on the street during the day.
The cheapest I could find for a 19 year old male was $270 per month.
Anyway you slice it, that’s a fair chunk of change for a 19yr old, just to insure the vehicle that they need for work every month.
Is there an alternative to comprehensive Insurance?
Third Party Property Damage
Depending on the age and type of vehicle you’re insuring, you could be better off restricting your coverage to Third Party Property Damage (TPPD), which will cover any damage you cause to other people’s vehicles or property when you are at fault.
For a 19-year-old male, the cheapest monthly cost I could find for TPPD with roadside assistance, using the 1st set of vehicle data was $66.10 per month. In this case, if your vehicle is damaged, stolen, or destroyed in an accident, you are responsible for all expenditures, not the insurance provider.
Third Party Fire & Theft
Using the 1st set of vehicle data, for a 19yr old male to have Fire & Theft Insurance with roadside assistance but with $695 excess and they would only insure up to $10,000, up to $5,000 damage caused by another driver, the cheapest I could find was $53 per month.
What are my thoughts on all of this?
If you are under the age of 25, have a job, and rely on your vehicle to make a living, I believe you should get comprehensive insurance and be sure to either tick the extra box for roadside assistance or make sure you get it separately.
With compulsory third party insurance (CTP) mandated in all Australian states, I’m not sure I see the need for Third Party Property Damage. If you cannot afford Comprehensive Insurance and your vehicle is worth less than $10,000, Third Party Fire & Theft may be a viable option but please do your own research.