Question: Your advice to the owner of the 1989 Toyota Corolla (Car Clinic, December 9 2015) — namely to drop the insurance on the car — surprised me. I drive a car that’s pretty old and has little book value, but my understanding is that the insurance is less about my car than about the damage to the other vehicle in the event of a collision.
Answer: You are quite correct, Kathy. When a car reaches a certain age and its book value crosses the line between consolation and insult, one becomes more concerned about the damage you can cause, should you bump into a Porsche or Ferrari, than about the damage you may suffer in a collision. This is where balance of third party insurance enters the picture.
It covers only the damage inflicted by your vehicle on the property of someone (outside your vehicle) in the event of an accident. The name “balance of third party” goes back to the days when we had compulsory “third party” insurance covering personal injuries (but not damage to property) of someone outside your vehicle in an accident. Balance of third party insurance is normally considerably cheaper than comprehensive insurance.
For a higher premium, you can get fire and theft added to balance of third party. If, on the other hand, your budget is too tightly stretched for even balance of third party alone, you can only resolve to keep your car roadworthy at all times, and always, always drive defensively.
As long as you are never to blame in any accident, nobody can claim from you for damage to their car. In the article to which you refer, I understood the insurance to be comprehensive insurance, seeing that the value of the insured car was mentioned (which would be irrelevant for balance of third party insurance).
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