$1000 excesses unfair to young
There are few more sobering experiences than a tour of the damaged ‘‘End of Life’’ car yard of Turners Auctions.
It’s a place where crashed, stolen and abused vehicles go before they are dismantled and recycled.
It’s a big operation, with around 21,000 vehicles passing through the South Auckland yard each year.
Each a once-loved vehicle, they are now in conditions ranging from once-loved cars that show the effects of a solid shunt collision to complete burnt-out shells, and mangled heaps.
Schools sometimes bring teenagers on trips to the yard, intending them to learn a little about what happens to cars when they are slammed into trees, or other vehicles.
Some of the twisted piles of metal that get trailored into the yard tell stories of people caught in life-altering collisions, if not life-ending ones.
The man who runs the yard for Turners is Shane Prince, and his work has made him an advocate for car insurance, as he tells the
GOLDEN RULES
Drive insured Drive carefully Shop around for a fair premium young teens on his tours.
He’d make it compulsory, if he could. The decision not to force every car owner to have insurance was a controversial one. A Ministry of Transport study found there really weren’t that many uninsured drivers, and that countries where car insurance was compulsory (like the UK) had higher levels of uninsured drivers.
Many continue to think the country made the wrong decision. A survey by Canstar in March suggested nearly 90 per cent of people think it should be, presumably including everyone who pays for insurance.
They are not talking about having the full comprehensive insurance, just third party, fire and theft, which is far less costly.
Which is just as well because youngsters are expected to pay a fortune for car insurance because generally speaking, they are more likely to crash.
But one way youngsters are really treated unfairly is in the excesses they are forced to take. They are around $1000, though one policy had an excess of $2500 if a policyholder let an under 25-year-old, who was not listed as a driver, drive their car leading to a claim.
I’m not sure those excesses are reasonable at all, and nor I suspect would a government considering making car insurance compulsory.
Premiums are where risk should be priced. I can understand the use of excesses to rule out small claims, but insurance is there to help people cope in a crisis. Having to pay a $250, or $350 excess is, well, excessive. Having to pay a $1000 is a massive ask for a young person.
And it feels deeply unfair, if they are not at fault.
Now in some markets telematics are gathering steam. Little GPS devices are put in cars so insurers can charge premiums that actually reflect the driving behaviour of each car owner. These are competitive markets where insurers are seeking an edge win business.
They offer youngsters the chance to prove themselves, and pay premiums that match the care with which they drive.
Our insurance market is basically a duopoly of two giant Australian companies. I reckon that’s to the cost of the young.