Older Cars And Insurability: What Your Customers Should Know

old car insurance

Photo from Dayland Shannon

Buying a new car may be an exciting time, but in order to get the most value from that purchase, one should be less concerned about the feeling of driving it home and more enthused over how many miles it ultimately lasts.

And for the most part, Americans are.

According to a 2011 report from the US Census Bureau, more than 6.5 million drove an hour or more to and from work each day — millions of people “who are in their cars for more than 10 hours a week,” Allstate notes.

“Perhaps unsurprisingly, we Americans are … really good at keeping our vehicles in working condition,” the company stated, adding that “in 2013, the average age of cars on the roads was 11.4 years, up from an average of 10 years old before the recession.”

One possible reason for the change: “People are still recovering financially, and some are wary of investing in new cars when they’re not sure what the future holds.”

Older cars can unquestionably be a blessing or a curse depending on how well they’re taken care of. If your customers are gravitating toward the purchase of a used car — or if they simply want to keep what they have a little longer — here are some tips you can share with them to make their decision more affordable.

Weigh The Possibility Of Reducing Coverage

According to Jeff Schroeder, senior products manager at L.A.-based Mercury Insurance, “it’s important to recognize when a vehicle is overinsured because you don’t want to waste your money.”

Schroeder makes a good point, and being an insurance professional, it’s clear that he’s embraced the idea of doing what is best for the customer instead of what seems best for the company in the immediate term.

While it may seem beneficial on the surface to get customers purchasing more insurance products, Schroeder understands that the market is changing. Insurance agents are more than just sales people now; they’re trusted advisors to their customers. Distinguishing yourself in that vein can create lifelong clients.

So how should you advise on coverage for older cars?

First off, make sure they know what they’re getting.

As Bankrate notes: “Collision coverage pays to repair” and “Comprehensive pays for damage caused by factors other than accidents,” such as fire, theft, vandalism, natural disasters and collisions with animals. More here.

The Insurance Information Network of California (IINC) adds: “… if the vehicle is valued at $1,000 or less, the chances are good that collision and comprehensive coverage aren’t worth the cost.”

Still, it’s important that insurance customers know the repercussions. “Before you reduce coverage on your older car,” Bankrate states, “make sure you understand how much it would cost to replace the vehicle. In some cases, it may make sense to keep full coverage on a years-old car that has maintained a high value.”

“If your car is valued at a point that is higher than what you would want to pay out of pocket to replace it, you may want to think twice about dropping coverage,” adds Tully Lehman, spokesman for the IINC.

Load Up On Liability

Liability insurance is one insurance product that no used car owner should be without. Even the worst junk heap can reek havoc on the roadways, and when that havoc spills over into the lives of others, it can bring with it steep costs. That’s why, even if the car in question is a clunker, it is important to hold liability. For one, it may be law in the state where you live; but more importantly, it offers these protections:

  • Bodily injury, or coverage for when your car causes harm to another person. This can include legal fees if the other person brings a lawsuit against you. It does not include damage to you, others on your policy, or damage to the vehicle itself.

  • Property damage, or coverage for the damage to another car or piece of property.


In Summary

For the last two decades, the overall lifespan of automobiles has increased dramatically, and with enhanced technology, that longevity won’t be going away any time soon. As vehicles continue to age gracefully, your customers will probably be keeping their cars on the policy for longer amounts of time. Make sure they know what car insurance options are available to them and when it becomes counterproductive to carry full coverage. They’ll appreciate that you’re watching out for their wallets.

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