Most car owners have car insurance because itâ€™s a legal requirement in Singapore. Everybody has heard that as cars grow older, insurance rates tend to go up. Comparing car insurance quotes has also never been easier with the help of sites like MoneySmart.
Is it a universal truth? Are you better off with one insurance over another? Are older cars cheaper to insure? Does it matter what kind of insurance coverage you acquire?
Weâ€™ll answer these questions in this article, so keep reading!
Can You Expect More Affordable Insurance Premiums for an Older Car?
In general, if an older car is less expensive to fix or replace than a newer version of the same model and make, it could cost less to insure.
Over time, a vehicle loses its value due to depreciation, lowering the maximum amount that an insurance carrier would be required to cover in the event of a crash. This is why insurance premiums are often lower for older cars.
Old Cars Versus New Cars
As premiums for newer car models can be high, a vehicle’s age considerably impacts how much it costs to insure it.
The insurance premium you pay is affected because newer parts tend to be more expensive, making necessary repairs or replacements costlier.
Older models cost less because most auto parts are affordable and easily accessible. As a rule of thumb, as a vehicle gets older, the insurance premiums decrease. However, once it reaches 10 years, it will remain at its minimum amount.Â
According to our research, some insurance companies charge a lower rate for newer cars. In contrast, others offer low premiums for older cars, so whether youâ€™ll save on insurance costs for your older vehicle may also depend on the insurer you choose.
Why Are Some Older Cars More Costly to Insure Than Newer Models?
Older vehicles may lack sufficient safety and anti-theft systems that insurers rely on to determine your likelihood of filing an insurance claim. However, these security features are also costly to repair, thus, resulting in newer cars being more costly to insure.Â
Therefore, an older vehicle may be less costly to insure if it lacks any high-tech components that may need to be replaced.
This is an exception if your vehicle is very old and new components are difficult to come by. Moreover, the cost of insurance for your car may increase if the manufacturer has filed for bankruptcy or no longer produces that model.
To determine whether it’s worthwhile to keep your older vehicle, you’ll have to compare car insurance quotes.
Keep In Mind That Other Factors Also Influence the Cost of Your Car Insurance
In addition to age, the vehicle’s make and model also impact your insurance premiums. Low insurance rates are expected if your car is manufactured in Asia.
However, due to the high cost of the components and import costs, you can expect to pay more for insurance if you drive a vehicle purchased abroad, such as a European vehicle. On the other hand, insurance companies will offer affordable coverage if your car has a smaller engine.
Other factors that also impact the overall car insurance cost include:Â
- Â Â Â Â Your location
- Â Â Â Â The vehicleâ€™s road safety risk profile
- Â Â Â Â Your age
- Â Â Â Â Driving history
- Â Â Â Â Credit score (applicable in some states)
- Â Â Â Â Your risk profile
Insurance for an Older Car Versus a Classic Car
With the added benefit that it might be less expensive to insure than a newer model, car insurance works the same way for an everyday vehicle that is 10 years old and older.
However, you could consider classic auto insurance if you own a vintage car that meets specific requirements (such as driving it occasionally).
Classic car insurance offers coverage up to an agreed amount, which often takes the cost of restoring the vehicle and its market demand instead of just insuring it up to its depreciated worth.
Â Final Thoughts
While insurance premiums on an older car will likely be cheaper, other factors also play an essential part in determining your overall cost. This includes your location, the model and make, the types of coverages you choose, and more.
MoneySmart is committed to helping you make better financial decisions, so to find out more about insurance coverage and compare car insurance quotes for your old car, get in touch today!