Government Car Scrappage Scheme Has Serious Flaws

New for old! New for old!

You hear the expression a lot in the UK Car insurance Industry, but in the case of the recently announced car scrappage scheme we'd like to inform Mr Gordon Brown, that there is no Genie in a Lamp!

The Government sponsored car scrappage scheme has in our opinion been inadequately thought out and is seriously flawed, the result of which will have a long term detrimental affect upon the classic car market and consequently upon specialist and classic car insurance. More importantly it's going to cost you the public!

All vehicles that are over ten years old, both cars and vans, are eligible for the scrappages scheme which starts next week.
Under the scheme, if you trade in your old motor for a new one, the government puts GBP 1000 of taxpayers money in, and the already struggling UK car industry foots another GBP 1000 of the price of the new car.

So how does this help the UK Car Industry? We think it is seriously flawed for a number of reasons:

We cannot see that such a small percentage amount, even off the price of the cheapest of FOREIGN import cars, of say 25%, will stimulate demand from an already indebted UK public.

Besides why would anyone think of buying a new vehicle when there are so many good deals to be had with pre owned or lease cars?

How would the majority of people who drive 10 year old cars, be able to afford a new one even if with a couple of grand knocked off the price?

How would the majority of people who drive 10 year old cars, be able to afford the car insurance premiums on the new ones?

Why is the scheme going under the green banner when it is going to create more waste?
In case the government haven't noticed the bottom has fallen out of the second hand scrap metal market since China stopped buying.
Are we going to see England's (and Britain's) green and pleasant land turned into fields piled high with scrapped cars. What's so green about that?

The scheme is vunerable and open to fraudulant use by unscrupulous motor traders!

On the good side there should be more spare parts available and the prices should drop for classic car replacement parts.

So what's the Impact of the scrappage scheme on the UK Car Insurance?

Many of the standard all risks car insurers are rubbing their hands in glee at the prospect of the scheme as they see immediate vast profits to be made from the change, at the cost to YOU the British public!

Essentially the car insurers stand to make vast sums of money in two ways when you cancel your policy and take out a new one:

1. When you cancel your car insurance contract mid-term, in the majority of cases you will get short period rates, which means you won't get six months of your premium back, if fact you'll be lucky to get four months!

Bingo Car Insurers!

2. Car Insurance premiums for new cars are going to be more expensive per se.
If the policyholder only had third party cover on his ten year old car, then fully comprehensive car insurance on the new car is going to be possibly five or six times what they were previously paying!

Bingo Car Insurers!

The car scrappage scheme has also posed the insurance industry some very tricky questions when it comes to the question of write-offs or total loss claims.
At the moment claims payouts are usually based upon the value of the vehicle before a write off occurred. But the majority of 10 year old cars which are not sought after classics, are worth less than GBP 2000.
Are we going to see the majority of write-off claimants retain the salvage, as it's worth more than what the car insurance company is offering?

We'd advise all owners of 10 year old cars to think seriously about the personal cost to themselves of entering the scrappage scheme. If you are looking to save money on car insurance you would be well advised to keep the older car, and if you do limited miles each year, check out specialist car insurance and classic car insurance schemes to save hundreds of pounds on premium costs.

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Classic Car Insurance at the cheapest UK rates from over 100 schemes at http://www.car-insurance.tv

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Classic Car Valuations - What's my classic car worth?

A useful guide to classic car valuations for insurance by our resident classic cover expert Dave Healey

How to Value a Classic Car For Insurance Purposes

Before you go hunting around for classic car insurance it is a worthwhile exercise considering the actual value of what your beloved cherished motor is worth. The cost of these specialist car insurance polices is often determined by the sum insured or declared value. Unfortunately your opinion of the value of the car and that of the insuring company may differ widely. How do you value your classic car for insurance purposes?

Unless you approach this potential problem from inception, that is the day you take the policy out, if the worst happens and you need to make a claim where your car is written off, you may not get the full market value for your classic. This problem is exacerbated if your particular classic is rare, vintage or a historic collectors car.

With a standard car insurance policy on a replacement like for like basis, the value of the vehicle is often set by the market value of the time, typically taken from one of the large publications such as Glasses guide to motor vehicle prices. The amount you will be probably be paid for a write-off will be at the current market value of your car, an annual depreciating price given to all cars and vehicles.

This works fine in the majority of those claims, however with the classic car market there is no such reliable guide, and problems can arise when a classic car has been involved in a total loss accident.

It is highly unlikely that an owner will know the actual value of their classic car at any point in time beyond when the bought it, and this applies equally to an Insurer who has to calculate a price for the risk. A decision that also has to be made by the insurer in pricing his classic car insurance policy is the cost of repairs. Specialist tools and replacement parts might be required and it important for a prospective purchaser of a classic car insurance policy to understand the levels of repair cover offered, and whether you are bound to take your car to an approved repairer in the event of a damage claim

To avoid the above problems that may occur, most specialist car insurers of classic and other collectors vehicles have devised a cover option or policy element called an 'Agreed Valuation'. The purpose of the Agreed Valuation cover is that in the event of a total loss claim where the classic car is beyond repair and written off, the underwriting company will guarantee to pay the claim in full to the agreed value of the classic car, less any excesses that may be applicable. In most cases the agreed value of the car is guaranteed for certain period of time. If the value of your motor changes significantly at any time you will need to inform your insurance company who will arrange for a revaluation. Many specialist car insurers offer the valuation service as part of the basic policy cover and it is included in the cost, others will charge a small fee and offer it as optional cover. The valuation process is fairly easy with most classic car insurance companies requiring a set of photographs and accompanying purchase or restoration documentation by post.

If your classic car is valuable or difficult to value you should consider taking out a policy where agreed valuations are included as part of the scheme to avoid problems with the insurance company in the future. Usually an Agreed Valuations Certificate is issued by and often only valid for, the participating insurance company. If you are planning to switch classic car insurance to take advantage of the many offers that are currently available from specialist companies on the Internet where the market is softer and premiums cheaper, be sure to first check that a certificate issued by your previous company is accepted by the new insurer or that the new company offers an agreed valuation service.

If you own a classic car it is not worth trying to save money on premiums today when it may cost you much more in the future in the event of a claim. Safeguard yourself by purchasing classic car insurance from a specialist car insurance company which has the experience of dealing with cars like yours, and can offer you cover where the value of your classic car is guaranteed.

Article Source: http://EzineArticles.com/?expert=Dave_Healey