Why Is Insurance Cheaper For An Older Car?
A car, for many, is not just a mere mode of transport that gets them from A to B. For some, it is a bold statement of their social standing and for others, their cars are extensions of themselves – each with their own unique character. I have encountered proud car owners who personify their vehicles going as far as to call them “baby” or “darling”, much to the dismay of their wives and significant others. As a consequence, people tend to get very attached to their cars and so intend to hold on to them for as long as they possibly can.
There’s an old saying that goes “Fine wine gets better with age.” What holds good and true for wine sadly does not translate to the domain of automobiles. Cars much like other assets depreciate over time. Depreciation refers to the decrease in value of an asset over time. As your car gets older, the market value of your car also depreciates steadily with each passing day.
Since the premium for your car insurance policy is calculated based on the IDV – the Insured Declared Value and the age of your vehicle, the older your car gets, your insurance cost becomes cheaper. This is why used car insurance tends to be cheaper than buying insurance for the same model and make when the car is new.
Also, as your car gets older and with claim-free driving, you can continue to accrue sizeable No Claim Bonus discounts on the car and this will result in a reduced premium amount for renewal with each successive year.
Due to all these reasons, car insurance for your older car is cheaper. One can make full use of this while buying a used car so that they get the benefit of insurance coverage as well. However, it is counter-intuitive and makes no sense to wait till your car gets old to buy car insurance. If your car – new or old – is uninsured, you leave it prone to damage during accident and the price you end up paying for not buying insurance is too high.
HDFC ERGO offers a wide range of car insurance policies for you to choose from. Please visit their website to check out policy documents and brochures on car insurance. When you choose HDFC ERGO for your car insurance, you can rest assured that the safety of your vehicle is in capable hands! You can easily avail upto 60% off on 5+ year old cars.
Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before going ahead with the purchase.