Third-Party Insurance & Older Cars: Is It The Practical Choice?

A car is essential for many people, and you have many different vehicle makes, models and year options. While some people relish driving the latest and most advanced models, you may be content with driving an older car that gets you to your destination safely and securely.

You may not think you have much in common with drivers of flashier and fancier vehicles, but you do — as you'll both need some form of Car Insurance. Discover if Third-Party Insurance from Budget Insurance is the most practical solution for your older car. 

Understanding Third-Party Insurance

Increases in fuel prices, inflation, and the cost of living mean that South Africans continually have to stretch their incomes. It's natural to use this opportunity to examine your spending and try to cut costs. Insurance is often a starting spot for many people who think cancelling their insurance or taking a plan with lower premiums is a good idea. This isn’t always the case. 

You should think about the cover provided and how you use the vehicle. For instance, when you buy and drive a new car, you commit to a lengthy repayment period and may resell it in future. Paying for repairs and accident damage — or settling any balance owed to your vehicle finance provider if it's written off — will be a priority.

You'll also drive it more often and confidently, as newer cars often boast superior fuel consumption and advanced accident avoidance and protection technology. However, if you have an older car that is only used for short distances, you might find that it makes sense to opt for Third-Party Insurance. 

While it’s true that Comprehensive Car Insurance is geared towards newer vehicles, it’s still the best option for older vehicles if you use the car frequently and don’t have personal funds to address repair or replacement in the event of damages or theft. 

So, what is the best insurance for old cars?

Firstly, is it worth insuring an older car?[1] Absolutely. Finding the best coverage for your older car will require comparing various types of insurance quotes relative to your vehicle’s age and your unique circumstances. When considering Third-Party Car Insurance, carefully examine the pros and cons offered.

Pros of Third-Party Insurance for older cars

The benefits of Third-Party Only Car Insurance include:

• Cost-Effectiveness: Third-party-only insurance is more affordable compared to comprehensive insurance policies. This can be advantageous for individuals on a tight budget or those driving older or less valuable vehicles.

• Basic Coverage: While it doesn't cover damages to your own vehicle, Third-Party Car Insurance provides coverage for damages caused to other people's vehicles or property. This basic coverage can still be crucial when you're at fault in an accident.

• Protection Against Third-Party Insurance Claims: It protects you from financial liability for damages or injuries caused to others in accidents where you are deemed at fault. This can prevent significant financial losses resulting from legal claims and settlements.

• Peace of Mind: Knowing that you have some insurance coverage can provide peace of mind while driving. 

• No Deductible: Unlike comprehensive insurance policies, which often have deductibles, Third-Party Car Insurance typically doesn't have a deductible. This means you won't have to pay anything out of pocket when claiming damages caused to others.

To illustrate how Third-Party Insurance could benefit you, consider the following scenario: Londiwe recently graduated from university and was gifted the fully paid-off family car from her grandparents — under the condition that she insures it herself. She is happy to use this older car for short trips around town while she saves up to buy a newer one. She doesn’t have a full-time job yet, so her funds are limited. 

Londiwe investigates insurance options for older cars. She realises that it all boils down to her individual needs and the following factors: 

• The car is paid off

• She is willing to write it off in the event of damage or theft

• She uses the car infrequently for short trips only

• The vehicle is of very low value, given its age and condition 

Given her risk assessment, Londiwe elects to take out Third-Party Car Insurance. She's happy to pay a lower premium as she's just started her first job. She understands that having Third-Party Insurance means she'll only be covered for damages and injuries caused to third parties when she's at fault. But by saving money and paying lower premiums, she also puts away more money each month towards a newer car.

Cons of Third-Party Insurance for older cars

You may have an older car, but that doesn’t automatically mean that Third-Party Insurance is the right choice just because it offers a lower premium. Consider these disadvantages when it comes to Third-Party-Only Car Insurance:

• Limited Coverage: Third-Party-Only Insurance provides coverage for damages to other parties involved in an accident but offers no protection for your own vehicle. If your car is damaged in an accident that you caused, or if it's stolen or damaged, you'll have to cover the repair or replacement costs yourself.

• No Coverage for Personal Injuries: This type of insurance doesn't cover medical expenses for injuries sustained by you or your passengers in an accident, regardless of who is at fault. You would need additional coverage, such as Personal Injury Insurance, to have this kind of protection.

• Potential Out-of-Pocket Expenses: Without coverage for your own vehicle, you may find yourself facing significant out-of-pocket expenses for repairs or replacements if it's damaged or written off in an accident.

• Limited Financial Protection: While Third-Party-Only Insurance protects you from liability claims made by other parties involved in an accident, it may not provide sufficient financial protection if you're involved in a serious accident with extensive damages or injuries. In such cases, you could be personally responsible for covering costs that exceed your insurance limits.

• Limited Additional Benefits: This type of insurance often lacks additional benefits and features that comprehensive policies offer, such as roadside assistance, rental car reimbursement, or coverage for damage from natural disasters.

Third-Party Car Insurance: what to consider

To get a better idea of a Third-Party Insurance cost and potential savings, have the following information on hand:

• Your vehicle’s current market value
• Your vehicle's condition
• How frequently you use the vehicle
• Your budget and ability to take on financial risk
• Your willingness to purchase additional coverage to protect specific areas of your car, like Scratch and Dent Insurance. 

Get a Third-Party Insurance quote from Budget

Make the smart move and take the first step towards potential savings by obtaining a quote from Budget Insurance. Reach out to our team today to discover if this option aligns with your needs and to get a Third-Party Insurance cost and quote.

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Sources:

[1] AutoTrader: Are Older Cars Cheaper to Insure? 

Disclaimer: The information in this article is provided for informational purposes only and should not be construed as financial, legal, or medical advice.