It was a personal finance blog,
now it is a just a spot for me to voice an opinion.
Thursday, 24 March 2011
Buying German car insurance
Our beloved Renault Scenic died unexpectedly. It all started when my wife rang me to see if the car is still OK to drive even though it was making a funny noise when it is braking. Not to tempt fate too much, I check the car into the mechanic. The problem turns out to be three major costly problems, a sensor has malfunction within the braking system, a belt has reached its end of life and needed to be replaced and the car is overdue for its regular service by 10000km. It was going to cost about 3500 € to get the car back on the road.
Given that we originally only paid 5000 € (some say that it was too much already), we opted to trade it in and get a new car.
Well, with a new car, I need to shop around for some insurance for it. The insurance needs to be the full insurance covering liability and comprehensive.
Along the way, I discovered the following things.
There are surcharges if you choose to pay quarterly (3% surcharge) or monthly (5% surcharge). So go annually or half yearly if you can.
Protect your insurance rating. We had a accident during the year and our rating went from a SF 10 to a SF 04. The higher the number, the lower your insurance cost. For us, this is a different of 30%. The rating goes down quickly, but goes up slowly.
Shop around. Using both check24.de and geld.de, we were able to get a comparison of some of the major German insurers. From this comparison, we were able to get a 10% discount from our current insurer's offer.
Internet insurers vs shop front insurers. Those who sell insurances online seems to cost a bit less.
A small car may not be cheaper to insure than a bigger car. Apparently if a lot of young people drives a particular type of car, the cost of insuring it will be higher even though the driver is not consider young any more.
After a few days of insurance shopping, I decided to stick with my current insurer as they can speak a good deal of English. I feel that my German is probably not good enough to deal with the insurers if something goes wrong.
Update: Since I had posted this article there are some items that is worth mentioning.
1. If you did get into an accident, it may be worthwhile considering paying for the damage yourself. This damage for your own car or the other parties. This will help to protect you insurance rating. For example, recently we had an accident where the side view mirror needed replacing. The cost was about 150 €, so opted to pay for it ourselves. If we had chosen to get the insurer to pay for it, our insurance rating would suffer and our premiums would have increased. When our insurance rating return to the same level, the difference in premiums would be more than 150 € that we paid.
2. If you have a second car, the insurance premiums for it will be different to your first car. It would start at the lowest insurance rating. A history will need to be built up to improve the rating and decrease the premiums.