Car Scrappage Scheme

The scheme announced by Alistair Darling has some car insurance implications

Tuesday, May 05, 2009

The car scrappage scheme announced in the Budget is good news for anyone with a car more than 10 years old who was planning on buying a new one. But there are some insurance implications. Here are a few to get you thinking.

The first is that a new car costs more to insure than an old car of the same make and model. So you should anticipate an increase in your insurance costs. Next is that for some people it won’t be easy to switch cover from the old to the new car because older cars might have third party fire and theft cover and comprehensive will be needed. Your old policy might need to be cancelled and reaplced by a new comprehensive policy and whiclt it’s actaully quite easy, there si a bit of hassle. And finally, there’s a question over the value of your car. Before the Budget your car might have been worth £500, but if you trade it in to buy a new one you’ll get a discount of £2000. In effect your car is worth £2000 as long as you’re trading it in. So if you write your car off how much do you get paid out? I’m afraid the insurance industry doesn’t have the answer to that, but it’s an interesting debating point.

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