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So why won't insurance companies cover your 10-year-old car?

Many insurers refuse to offer policies for older cars regardless of their roadworthiness.

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IRISH CONSUMERS ARE used to the acquisition of car insurance here being a costly enterprise, particularly for young or experienced drivers.

But there are other issues at play.

Many insurers flat out refuse to cover vehicles that are greater than 10 years old.

The roadworthiness of the vehicle is not an issue here (in many cases a company will offer a policy regardless of whether or not the car in question has a valid NCT cert, although that’s a separate topic) – to begin with, a car built in 2007 will often sport many of the modern conveniences you would expect from a newer machine.

The issue is solely one of age. And it means, again, that those operating on a lower budget may struggle to find anywhere to insure their vehicle, even if they can afford to do so.

But if a vehicle is perfectly roadworthy, why would an insurer refuse it cover?

Asking around

TheJournal.ie put the same question to seven separate insurers – Liberty, Axa, Aviva, 123.ie, AIG, Allianz, FBD, and two intermediaries/brokers, the AA and Chill – that being, what is the company’s policy on cars aged ten years or older, and if it won’t insure such a car, why not?

All told we got just four responses with three official statements of policy received in return.

It is probably no coincidence that all three who responded positively are willing to insure older cars.

Liberty’s Deirdre Ashe said that her company will cover private and small commercial vehicles up to 20 years of age, and vans up to 25 years old.

Aviva meanwhile said that since summer 2015 it had been refusing quotes for cars aged 14 years or older “because of our claims experience” with regard to such vehicles.

“We simply could not cover new business for these older cars or vehicles on a financially sustainable basis. Rather than pushing up rates across our broader customer base, we decided to cease quoting for new business in this segment,” a spokeswoman said.

However the company added two caveats – that existing Aviva customers could continue to insure an aging car, or insure an older vehicle should they buy one, and that in the next two months it is planning on extending cover to “75% of vehicles registered after 1999″. Which is positive news for drivers.

The AA said that it does “insure cars which are older than 10 years in accordance with our underwriters terms and conditions on a case by case basis”.

“As with any insurance policy we take a large number of risk factors into consideration… when deciding whether we can provide an insurance quote or not and do not make this decision on the basis of any single factor,” the company said in a statement.

We must operate within the terms of our underwriters and as a result cannot guarantee that we will be able to provide insurance in every case where the car is older than 10 years.

So there are options for those driving an older car. There just aren’t that many of them. And less choice for a consumer means less bargaining power and a poorer deal.

Taking a risk

But the key word in the AA’s statement is ‘risk’. Specifically a company’s risk appetite. The reason for declining a quote for an older vehicle tends to come down to specific risk factors – with many companies deciding that the driver of an older car is business they can do without.

“Insurers make decisions on insurance cover based on their underwriting criteria, their risk appetite and their claims history,” a spokesman for industry body Insurance Ireland told TheJournal.ie.

A well as the type of vehicle, its engine size and its age, other factors will include the type of driving licence the applicant holds and their driving experience, but the weighting applied to each factor is a matter for each company. Decisions on insurance cover are made in the context of the claims environment where our personal injury awards are dramatically out of kilter with those paid internationally.

Screenshot 2018-03-10 at 20.39.03 Chair of the Personal Injuries Commission Nicholas Kearns Sasko Lazarov / Rollingnews.ie Sasko Lazarov / Rollingnews.ie / Rollingnews.ie

Doubtless, the erratic nature of Irish personal injury payouts are a major factor in the industry’s reluctance to insure older cars – payouts for soft tissue injuries here are more than three times that seen in Britain, and account for about 80% of all payouts – again, way ahead of the international norm. The inference is clear – older cars equal more problematic claims. Unless that changes neither will the insurers’ stance.

But, as can be seen via the Aviva statement above, there may be light at the end of the tunnel, evidenced to an extent by the return of a smidgen of stability to the cost of premiums here in 2017 after an especially rocky two years previous (in 2015 alone more than a third of Irish drivers saw their insurance rise by up to 50% – a situation that descended into something of a blame game between insurers and the legal profession).

Work has been done to rectify the problem however, starting with the publication of a fresh Book of Quantum in 2016, the first in 12 years, which officially crystallised the level of claims being seen in Ireland.

Insurance Ireland states that the next 10 months represent “an opportunity” – both in terms of the reportage of the Personal Injuries Commission (PIC, chaired by former High Court President Nicholas Kearns), and with regard to the introduction of legislation to give the Personal Injuries Board more substantial powers to prevent claims from hitting the courts.

The PIC is seeking to both quantify soft tissue injuries such as whiplash which dominate Irish injury claims, and to benchmark the claims seen here internationally.

“At present with companies it comes down to how much of the older car risk they want,” an industry source says, who says the NCT is something considered “as a point in time assessment and it’s one factor in terms of how they price”.

Market share

“They want market share, and every company wants to be profitable. But if they won’t insure you then it’ll come down to market conditions – the direction where the claims and settlement costs are headed, and whether or not the level of risk is profitable,” they say.

File Photo There has been a slight drop in the cost of running a car - but it will still set you back over €10,000 a year Eamonn Farrell / Rollingnews.ie Eamonn Farrell / Rollingnews.ie / Rollingnews.ie

The same source adds that while the situation is “improving”, with one report from the PIC detailing the trends regarding soft tissue injuries already released (and instructing insurers to release their own data on such claims), and another on the benchmarking of claims and payouts pending, the situation remains “difficult”.

“Court awards are still going up,” they say simply. “And you still have difficulties with the injuries board”.

Legislation has been on the table regarding the powers of that board since last summer, although there is no clarity as to when it might be passed.

“2018 is definitely a big year. We had the report of the Cost of Insurance Working Group last year. This year is about how it’s implemented,” the source says.

The CSO says there’s been a 12% year-on-year drop in claims – and there’s been some stability since the Setanta decision (in January of this year, which ruled that the costs incurred by the failure of the Setanta Insurance group were to be settled by the State).
What happens with the Personal Injuries Commission and the new injuries board legislation is key. Until then all the industry can do is work off the claims trends that are already there.

Read: Quiz: How long is this Irish drive?

Read: How much money will the new Garda Commissioner be paid? It’s the week in numbers

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    Mute Seosamh
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    Jan 13th 2021, 9:01 AM

    Big business are the only ones making serious money during this, small businesses fending for themselves.

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    Mute Michael Kelly
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    Jan 13th 2021, 9:07 AM

    @Seosamh: So you don’t welcome the creation of over 1000 jobs? And Aldi from what I know are decent employers. I see the same people working in my local one for years.

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    Mute Nioe
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    Jan 13th 2021, 9:20 AM

    @Michael Kelly: they’re not creating jobs. People don’t eat twice as much food they just change where they buy. They are just taking market share from other irish shops, corner shops, markets etc which probably provide more jobs per euro spent.

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    Mute Dobby Dooo Dooo
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    Jan 13th 2021, 9:24 AM

    @Nioe: We all have a choice of where we shop. I do a supermarket shop and still support smaller local shops for meat, fish, newspaper etc. And the local shops in my area are always busy…

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    Mute Jim Beatty
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    Jan 13th 2021, 9:40 AM

    @Nioe: nail on the head

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    Mute Nioe
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    Jan 13th 2021, 10:13 AM

    @Dobby Dooo Dooo: of course we choose where to shop. I have no issue with aldi or tesco or whoever. All I’m saying is that a certain amount of money is spent and certain number of people are employed in the grocery sector, which will rise with population. That does not jump overnight because a new shop opens, it just moves around with market share. It is not job or demand creation. It is market share expansion.

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    Mute Earth Traveller
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    Jan 13th 2021, 11:41 AM

    @Nioe: There are other factors too. The country’s population has grown by about 30 percent over the last 20 years. That creates new demand.

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    Mute Nioe
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    Jan 13th 2021, 12:13 PM

    @Earth Traveller: I said that in my comment above.

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    Mute Berkieahern3
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    Jan 13th 2021, 1:19 PM

    @Jim Beatty: you can be sure the nail you buy in Super valu is twice the price of the one in Aldi though!!

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    Mute Seosamh
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    Jan 13th 2021, 1:36 PM

    @Michael Kelly: My gripe is not with Aldi, it’s the so called government.

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    Mute Leitrim303
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    Jan 13th 2021, 5:46 PM

    @Nioe: who can afford to shop in a corner shop

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    Mute Stephen East
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    Jan 13th 2021, 9:27 AM

    Local Aldi and Lidl they restrict people going in but once in its a free for all, Always felt these shops workers are under a lot of pressure as i see them running around like headless chickens almost running with pallets barely looking if anyone is there and when i have seen people talking to workers they almost look irritated like they are thinking stop talking to me i need to get the shelves filled

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    Mute Brian Madden
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    Jan 13th 2021, 9:49 AM

    @Stephen East: I think the staff in my local aldi and lidl are very helpful. It’s not a free for all. People might browse longer in the meat or fruit and vegetable section. Do you expect the staff to move people along once inside?

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    Mute Sean Dalton
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    Jan 13th 2021, 10:33 AM

    @Stephen East: its personal responsibility when your in a shop. What do you want staff with cattle prods at each aisle moving people along?

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    Mute Tom Houlihan
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    Jan 13th 2021, 11:41 AM

    This is incorrect. They will
    Not create ‘jobs’. You won’t eat more because there is another supermarket in town. You may just buy less in the other supermarkets and they will lay off staff .

    19
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    Mute Berkieahern3
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    Jan 13th 2021, 1:17 PM

    Fair play, they seem like descent employers. Same staff in the shop in my town for over 10 years now. And nice people aswell.

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    Mute Mary Walshe
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    Jan 13th 2021, 1:41 PM

    @Berkieahern3:
    And a lot of their products are Irish produced. Every so often they stock stuff by small producers starting out in business.

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    Mute Virgil
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    Jan 13th 2021, 10:38 AM

    As you enter Clifden, capital of Connemara, the first thing you see is… Aldi. Ah well, I suppose you can’t eat the landscape

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    Mute Joe Vlogs
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    Jan 13th 2021, 2:08 PM

    @Virgil: great thing too since it arrived. Locals are saved a one and a half hour drive to Galway or Westport to find a grocery store. Connemara is not just a summer holiday destination…people actually live here too.

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    Mute Declan McArdle
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    Jan 13th 2021, 9:14 AM

    What about opening stores in Northern Ireland???

    11
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    Mute thomas patrick
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    Jan 13th 2021, 9:15 AM

    @Declan McArdle: take your issues to the Telegraph

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    Mute Cian Nolan
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    Jan 13th 2021, 9:55 AM

    @Declan McAr

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    Mute Declan McArdle
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    Jan 13th 2021, 10:14 AM

    @thomas patrick: Belfast Telegraph or the Toryograph in the UK?

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    Mute Pat Murphy
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    Jan 13th 2021, 11:09 AM

    @Declan McArdle: not in the eu so lol

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    Mute Aunties
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    Jan 13th 2021, 10:02 AM

    Beep beep beep.

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    Mute Maalouf
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    Jan 13th 2021, 12:32 PM

    I always shop and support local business. That’s why I only shop in Tesco Metro.

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    Mute Michael Kelly
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    Jan 13th 2021, 11:27 AM

    Good news we need it

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    Mute Dave
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    Jan 13th 2021, 4:48 PM

    A friend of mine loves working for Aldi but is always busy, she barely gets any free time and her day consists of “Manager required at till 3″ ” Till 4 will now be open”…

    Only for it to close 2 minutes later and a further 1 minute later shes back at it again ” Till 3 will now be open”

    4
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