Auto & Mobility
Car Insurance (Comprehensive Cover)
When is comprehensive insurance no longer worthwhile?
Optimising comprehensive coverage: When is it really worth switching for your vehicle?
Many drivers wonder when a comprehensive insurance policy no longer pays off. The answer depends on several factors, including the value of the vehicle, age, and individual risk tolerance. This article explores when switching to third-party, fire and theft cover or pure liability makes sense and how you can save costs in the process.
The topic in brief and concise terms
A comprehensive insurance is often no longer worthwhile when the vehicle is older than five to seven years and the residual value has significantly decreased.
The switch from fully comprehensive to third-party, fire and theft or simply third-party depends on the vehicle's value, the insurance costs, and individual security needs.
An annual review of insurance coverage and a comparison of premiums are essential to optimise costs.
Cost-Benefit Analysis: Critically Examine Comprehensive Insurance
Comprehensive insurance offers the most extensive protection for your vehicle, but it is also the most costly option. In addition to the services covered by third-party, fire, and theft insurance, it also covers self-inflicted accident damage and vandalism. The key factor in determining when comprehensive insurance is no longer worthwhile is the ratio between the current vehicle value and the annual insurance costs. A rule of thumb is that comprehensive insurance is often no longer profitable when the vehicle is older than five to seven years. A new car worth 30,000 euros may be worth only around 15,000 euros after three years. Therefore, regularly check the value of your comprehensive insurance.
Contributions to comprehensive insurance are influenced by factors such as vehicle classification, regional classification, and your no-claims bonus class. A high no-claims bonus class can even make comprehensive insurance cheaper than third-party, fire, and theft insurance. However, the vehicle's value decreases continuously, while the premiums do not decrease to the same extent. It is therefore advisable to check annually whether the coverage is still proportionate to the residual value. This transitional point is a good opportunity to consider alternatives.
Vehicle Age and Residual Value: Key Factors for Change
The age of your car and the associated depreciation are key indicators of when comprehensive insurance is no longer economical. In the first year after registration, a new car loses an average of 25 per cent of its value. After three years, the depreciation can already be at 50 per cent. For vehicles older than five years, a switch to third-party, fire and theft insurance is often recommended. For vehicles that are ten years or older, third-party liability insurance alone is often sufficient.
The decision also depends on the individual vehicle. A ten-year-old car can still have significant value depending on the model and condition. If the current value of your car is only a few thousand euros, the costs of comprehensive insurance often no longer make sense. A guideline is to consider whether the annual insurance costs exceed ten per cent of the vehicle's value. In such cases, a switch is usually advisable. Therefore, examining the residual value is essential for optimising your insurance coverage.
From comprehensive to third-party, fire and theft: When is the right time?
A switch from fully comprehensive insurance to third-party, fire and theft is often the next logical step when fully comprehensive cover becomes too expensive. Third-party, fire and theft cover protects against theft, fire, glass breakage, collisions with wildlife, and natural events like storms or hail. It is generally cheaper than fully comprehensive insurance because self-inflicted accidents and vandalism are not covered. A good time for the switch is often when the vehicle is between five and seven years old, and its current value has fallen below 50 per cent of the new price.
Consider the following points when deciding on a switch to third-party, fire and theft cover:
Vehicle Value: Has the value dropped so much that the additional cost of fully comprehensive cover is no longer worthwhile? This is often the case when the value is below 4,000 euros.
Cost Savings: What is the difference in premiums between fully comprehensive and third-party, fire and theft cover?
Personal Risk: Could you financially bear the cost of a self-inflicted total loss?
No Claims Discount: There is no no-claims discount for third-party, fire and theft cover. Sometimes, with a very good no-claims class in fully comprehensive cover, it can even be cheaper.
Weighing these factors will help you determine the optimal time for the switch and thereby optimise your insurance costs. The next question is when even third-party, fire and theft cover becomes unnecessary.
When is third-party car insurance sufficient?
For very old vehicles with low residual value, the question often arises as to whether comprehensive insurance is still necessary at all. Motor liability insurance is legally required and covers damages you cause to others. Comprehensive insurance, on the other hand, is voluntary. If the value of your car is only a few thousand euros, it might be more economical to forgo partial comprehensive cover and only maintain liability insurance. This is especially true if the annual cost of comprehensive cover no longer justifies the potential compensation.
For vehicles that are around ten years old or valued under 2,000 euros, many owners choose just the liability insurance. The savings on premiums can then be set aside for potential repairs. Consider whether you can and want to bear the risk of theft or glass damage yourself. The differences in policies are crucial here. Opting for liability only is the final step in optimising your insurance cover for older vehicles.
The Switching Process: How to Optimise Your Contract
Have you decided that comprehensive insurance is no longer worthwhile for your vehicle? Switching is usually straightforward. Most insurance contracts have a duration of one year and can be cancelled with one month's notice at the end of the contract. The deadline is often 30 November. There is a special right of termination, for example, in the event of a premium increase or after a claim. Inform your insurer in writing of your desired switch from comprehensive to partial cover or to liability insurance only.
Our expert tip: Clarify in advance whether certain benefits, such as the extended wild animal clause ('all types of animals' instead of just 'game'), will remain when switching to partial cover. Also compare the terms and conditions of different providers before making a final decision. An adjustment to your coverage can significantly reduce your annual costs. Remember that a well-considered decision can save you money in the long term while providing adequate protection.
Conclusion: Finding the Right Balance Between Protection and Costs
The question of when fully comprehensive insurance is no longer worthwhile requires individual consideration. There is no universal rule, but clear indicators. Depreciation, the vehicle age often exceeding five years, and the amount of the insurance premium are crucial criteria. An annual review of the insurance coverage is recommended to ensure that you are not paying for benefits that exceed the value of your vehicle.
The optimal insurance is a compromise between necessary protection and affordable costs. Carefully weigh your personal risk and financial situation. Sometimes fully comprehensive insurance can be worthwhile despite the vehicle's age, for instance, with a very good no-claims discount or if you are heavily reliant on the car. An informed decision helps you save money in the long run. If you are unsure about which coverage is right for you, we are happy to assist you with advice.
Request a personalised risk analysis now: Have your insurance situation reviewed for free and receive concrete suggestions for optimisation.
More useful links
Wikipedia provides a comprehensive overview of comprehensive insurance in Germany.
Kraftfahrt-Bundesamt (KBA) provides official vehicle statistics and inventory data in Germany.
Gesamtverband der Deutschen Versicherungswirtschaft (GDV) offers comprehensive statistics and information on the German insurance industry.
Statistisches Bundesamt (Destatis) supplies official data and analyses of traffic accidents in Germany.
Verbraucherzentrale offers independent advice and tips for saving on car insurance.
Deutsche Automobil Treuhand (DAT) enables access to current used vehicle values and market analyses.
FAQ
At what vehicle age is comprehensive insurance usually no longer worthwhile?
Generally, the rule of thumb is that comprehensive insurance is often no longer worth it for vehicles older than five to seven years, as the depreciation is substantial by then.
Is comprehensive insurance still sensible for a 10-year-old car?
In most cases, comprehensive insurance is no longer sensible for a ten-year-old car, unless it is a highly valuable vehicle (e.g., classic car) or your no-claims discount makes the comprehensive cover exceptionally affordable.
How much can comprehensive insurance cost in relation to the vehicle's value?
A rough guideline is that the annual costs of comprehensive insurance should not exceed ten percent of the current value of the vehicle.
What happens to my no-claims discount when switching from comprehensive to third-party insurance?
The no-claims discount of the comprehensive insurance is not directly transferred when switching to third-party insurance, as third-party insurance does not recognise a no-claims discount. Your no-claims class for liability remains unaffected.
Does third-party insurance cover vandalism?
No, vandalism is usually only covered by comprehensive insurance, not by third-party insurance.
When should I switch from comprehensive to liability insurance at the latest?
If your vehicle has only a very low residual value (e.g., under 2,000 Euros), and the costs of a comprehensive insurance (even third-party) outweigh the potential benefits, switching to a purely third-party liability insurance is often the most economical solution.
