How Can Fully Comprehensive Insurance Be Cheaper Than 3rd Party?
February 21st, 2008
From time to time statistics used by financial service providers can help you out in unexpected ways. For example, when you’re retiring and looking for an annuity, if you’re a smoker, there’s a good chance that you’ll get a better rate than a non-smoker. This is because statistics show you’ll probably live for less years than a non-smoker, so they believe they can afford to pay you a higher amount each year.
Another anomaly has been highlighted by the Motley Fool -when fully comprehensive car insurance actually works out cheaper than third party, fire and theft insurance.
This happens when there are a lot of irresponsible drivers opting just to take out 3rd party insurance on their cars - the insurer spots that they’re having more accidents, and are paying out more, so they raise their premiums for this group of drivers, sometimes to rates that are more expensive than their fully comprehensive policies. Of course, this can only happen for a period of time, because as people become aware of the situation, more will take out fully comp policies, including the irresponsible drivers. So the premiums for each type of insurance will move again, this time in the opposite direction.
The lesson to take away from this is that if you think you can only afford a third party insurance policy on your car, it’s worth at least getting a quote for fully comprehensive because it could actually be cheaper.
