Fully Comp v Third party costs

CobaltBlue_2

Cobalt Blue has left

benjus

Comp is often cheaper than 3rd party. Probably because the kind of person that goes for Comp is statistically seen as less of a risk.

Hintza

I don't even bother looking at third party policies these days. It has been this way (generally) for a number of years.

Rolandtheroadie

Just renewed, no voluntary excess also made it cheaper in our case.

System

In the days before repairs became the rip off they are now, 3rd party used to be a lot cheaper than fully comp however now that even a minor prang results in a repair bill somewhere north of 1K the difference in payout costs between the two types is negligible

Johno100

CobaltBlue wrote: »

Been looking at insurance quotes for my girlfriend;
Third party only is coming out as just as expensive as Fully Comp...
Is this usual?
It seems strange to me.

Yes, the main risk an insurer takes on when they insure your vehicle is the potential for 3rd party claims. If you were unlucky enough to hit and severely injure a pedestrian or other driver the cost of replacing or repairing your car would be miniscule compared with a personal injury payout that could be in the millions.

phill99

It's to do with the 'pooling' of risk. There are far more drivers opting for Fully Comp policies than just third party policies. Therefore the potential for payout is spread amongst a far greater number of people that are actually paying in, therefore it helps spread the insurance companies exposure, hence it will be cheaper.

Aretnap

There are various reasons why third party insurance is often no cheaper than, or even more expensive than comprehensive, including

(1) most of the risk is third party claims these days. If you drive into someone else's car then your insurer is going to have to pay out for repairs to their (possibly very expensive) car, an inflated car hire bill from a credit hire companies, a few thousand pounds in whiplash claims from the driver and all his passengers, and just maybe there'll be a really serious injury could result in a payout of six or seven figures. Next to that, whether or not they have to fix your car as well is neither here nor there, especially if your car is of relatively low value.

(2) People with third party insurance possibly make more and bigger claims than those with comprehensive, which makes sense if on average they tend to be people who are less concerned about their own cars, and drive in a manner to suit

(3) Related to (2), people with third party only cover tend to be tardier about telling their insurers about accidents - they have no particular reason to do it promptly as they won't be claiming themselves. This can mean that the cost of the claim gets inflated, as by the time the insurer finds out about it the third party has already gone to a credit hire company for an expensive hire car etc, rather than letting your insurer contact them first and offer a cheaper hire car themselves.

Insurance group is mainly a marketing gimmick for manufacturers of cheap/underpowered cars. Insurance companies don't actually use them to set premiums (except possibly as a ballpark guess when a new model comes out that they don't have any data on yet). Instead they use their own experience of how many claims people who drive that sorty of car have made in the past. It's not uncommon for a large, boring high insurance group car (eg Volvo estate) to be cheaper than a low insurance group but stereotypical young person/boy racer's car (eg Corsa) because they type of people who drive them, and the way they tend to drive them, are completely different.

Try third party, fire and theft - personally I found that to be cheaper than either TPO or comp. Also try varying the excess - up and down - and try adding some older people with good driving records (eg parents) as named drivers, even if they're not actually likely to drive it.

InsideInsurance

phill99 wrote: »

It's to do with the 'pooling' of risk. There are far more drivers opting for Fully Comp policies than just third party policies. Therefore the potential for payout is spread amongst a far greater number of people that are actually paying in, therefore it helps spread the insurance companies exposure, hence it will be cheaper.

Dont know a single insurer that pools only TPO/TPFT separately to Comp, in the ICA world at a minimum you'd be pooling all your motor risks together and with the chances under SII insurers are increasingly pooling all risks as greater discounts in capital charges can be achieved through diversification of the pool.

The reasons are mainly negative selection, ie high risk drives buy it as they think its cheaper but then when you calculate the average claims cost per policy its higher and so premiums reflect it. You can also find that electing to have a higher excess can also result in higher premiums for the same reasons.

A fair number of insurers have also stopped writing TPO and TPFT and so basic economics of supply and demand means prices have gone up as less competition.

Group 1 -v- 3 is also somewhat for the reasons pointed out above, that more than half of claims costs come from TP claims and if you hit someone with a Fiesta or an Up or a Wraith at 50mph the injury to the pedestrian is going to be pretty much the same.

Insurers also dont use Groups very much, they do their own analysis, similar to TPO -v- Comp, and find that certain types of people (namely teenage lads) tend to buy certain kinds of cars and so inevitably the claims for boy racer cars are much worse than say a maserati ghibli despite being cheaper, less performance and lower insurance group.