Park any doubts: insurance tips for second-hand cars
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By Bertus Visser
In recent months, second-hand car purchases have accelerated as the economic impact of Covid-19 and lockdowns have been felt and travel needs have changed. For some, second-hand cars are an attractive option. You may want to cut down on lifestyle costs by downsizing to a more affordable, second-hand car.
Perhaps you’ve had to give up a company car, or maybe you want to avoid running a more expensive vehicle than needed, now that working from home is an option. Using public transport may also seem less appealing during a pandemic, and students hoping to venture to classes safely may prefer having a personal vehicle on hand. Whatever your motivation for opting to buy a second-hand car, here are some factors to consider.
Before you buy
There are various options when it comes to purchasing second-hand cars, including being able to check if a car has been in an accident. Make sure you buy from a reputable dealer, and be extra cautious when buying a vehicle online. Unfortunately, fraud is a reality. When buying from a dealer, you may be able to request an e-Natis document to determine if the car was stolen. Whichever method of due diligence you choose, it’s essential to consider the full cost of the purchase before you sign on the dotted line.
Second-hand cars may not be as costly as new cars, but they may require more frequent repairs or have different safety measures in place. Newer models of cars are likely to have additions in technology, such as to the display settings or any automatic controls; they may include luxurious features as well. A second-hand car may have had features added after the vehicle was bought. Make sure these added extras – for example, an above-standard sound system – are included in your insurance, as you may not be covered if these additions are not documented.
Do the sums
While it may be common to include a maintenance plan when buying a new car, maintenance won’t necessarily be factored into your purchase price when you buy a second-hand car. However, you need to consider the cost of your car holistically, including services, new parts and licences. Of course, insurance should be included as a consideration upfront – just as it would when buying a new car. You might think a second-hand family car would be less of a crime target (compared to a brand-new, expensive sports car, for example) but you are at equal risk of getting into car accidents, which can be really pricey without proper insurance.
The retail value of your vehicle is something worth discussing with your financial adviser, as you could qualify for a reduced premium based on your car being an older model. Your adviser will also be able to advise on products worth considering for the maintenance of your car. This could include a warranty extension, depending on the vehicle you buy. Another example might be cover against small scratches, so you can avoid spending money on small repairs that add up.
All vehicles need to be maintained so that they run well and are likely to avoid a mechanical malfunction. Obtaining a service history on a second-hand car is helpful, if you are able to do so. Remember to service the vehicle regularly (even if you don’t drive often – every 15 000km or once a year is a good guideline to follow), and to check that tyres are rotated and replaced as needed. It is up to you to ensure your vehicle licence is kept up to date.
Older vehicles that may have outdated or reduced safety features may also be targets for crime. Unfortunately, the tricks of the car break-in or hi-jacking trades become common knowledge, and the easiest way to open any type of vehicle is likely to be known. Upgrading security could be a prudent move, but it’s also worth checking what would be needed. In some cases, adding a tracking device could improve your premium, while in others, it will have no impact on the insurance cover you pay for.
Update your policy
Your second-hand car will need to be properly added to your insurance policy. Make sure your adviser knows your routine and where your car will be, so that the correct information is carried over to your cover. Many of us have moved homes recently or are working from home and may have forgotten to update this information. So, it’s worth checking if your policy matches where you park.
Even if you haven’t bought a second-hand car, it can be a worthwhile exercise to go through your insurance policy to check what your current car is covered for.
Car hire cover can be crucial if you get into an accident needing repairs, for example. There could be additional benefits or important exclusions you need to be aware of too. Park any doubts and get in touch with your adviser as soon as you can.
Bertus Visser is chief executive of distribution at PSG Insure