A colleague at work the other day had his car written off and subsequent conversations about “gap insurance” illustrated once again just how often the modern motorist is constantly being short changed.
Said colleague was sitting at home watching TV when he heard the unmistakable sound of screeching tires and then a sickening crash. The scene outside was that of minor devastation. A car had left the road and in the process just missed a head on impact with an unyielding tree to then hit my colleague’s and his neighbour’s car. The driver of the offending car was found sitting shaking on a wall. Police and ambulance services arrived and the driver was taken to hospital for a check over. The driver was fine and it turned out that he was diabetic and had passed out due to a low blood sugar level. All in all, it was very fortuitous that no one had been hurt or killed, including the driver of the car and any passersby.
Once the dust had settled (sorry, couldn’t resist), the thorny issue of insurance had to be addressed and thus leads me back to my opening statement with regards gap insurance (which fortunately my colleague had in place). It’s always amazed me that car insurance unlike any other form of insurance doesn’t provide a like for like cover. For example, the carpet in my house is old and not in the best condition, but if some unfortunate mishap were to occur (and it often crosses my mind that it’s due some kind of misfortune) then the insurance company would pay for a brand new carpet to be fitted. The insurance company wouldn’t put conditions on the fitting of a carpet. The insurance company wouldn’t suck its metaphoric teeth and say, “well, sorry but you’ve been walking on that carpet and it’s ten years old now, so we’re going to reduce your payment accordingly”. No, the insurance company will pay out the going rate for a similar, but new, carpet to be fitted.
By the same token, if you inadvertently knock your laptop off the table, even if it’s now an obsolete model, the insurance company will pay out what you paid for the laptop originally, which in turn means, you will probably end up with a better specification laptop (as fitting with current standards) compared with the model which was broken.
This doesn’t happen in the motoring world. If you pay twenty five thousand pounds for a brand new car and that car gets written off, based on what happens elsewhere in the insurance world, irrespective of whether the accident happens one week, one month, one year or one decade after you first bought the car, you would fully expect to receive a replacement car of the value for which you originally paid. But unlike “normal” insurance, motor insurance always leaves the victim short changed. Despite stating that the value of your car is twenty five thousand pounds at the point you take out the insurance, this valuation is meaningless. At the point of claim you will be paid the trade value of the car based on its age and mileage. This means that you won’t even receive enough to purchase a car of similar age and condition to that which has been lost, leaving you to make up the difference. Unlike household insurance, you certainly won’t be offered a modern equivalent of the car you lost. However, what the motor insurance industry does offer is gap insurance. This allows them to charge you even more on your premiums to make up for the fact that the policy you’ve taken out with them, won’t pay out sufficiently at the point of the claim.
And it’s not just car insurance that’s giving us a raw deal. We’re all fully aware that hardly any of the “road tax” we pay actually goes back to maintaining the road network, which in turn results in damage to our vehicles. The fact that the majority of the cost of fuel is duty is also well documented.
The motor industry, like the chancellor at the annual budget giveth with one hand but taketh with the other. A car of ten to fifteen years ago would need servicing every six thousand miles. A car of today needs servicing only every eighteen thousand miles or so. To compensate for these less frequent visits, the motor industry has increased their hourly rate to astronomical levels. So yes, your car doesn’t need servicing as often, but it still costs just as much. Plus, the clever thing is that because the hourly rate is now so high, any unscheduled activity not covered by your warranty is going to have you looking at which family member you’re prepared to sell to fund the bill.
Car manufacturers are also getting sneaky with their designs. Cars such as the Honda Jazz and Renault Megane (or least the previous generation that I had) are engineered in a way that even changing a blown headlamp bulb requires (for the average motorist) a trip the dealer. So what should have cost about five pounds and about sixty seconds of you life, will now cost you at least fifty pounds and the inconvenience of having to book your car in with the service department.
But what’s the alternative? Politicians would point you to public transport. But of course politicians don’t have to use public transport, so are unaware of its cost and shortcomings. In addition, they work in London, which is one of the few places in the country where public transport makes sense and actually works, so they have a rather clouded and ill informed view of what it’s like for the rest of us “out in the world”. It takes me about twenty five minutes door to door (in rush hour I might add) to travel the ten miles to my office. Via public transport, the journey would require at least four bus changes and about two hours (each way!). It would also require planning of a level that would put the D-Day landings to shame. If things go a bit pear shaped in the office and I have to work late, then my chances of getting home that evening would reduce to nil.
How about cycling? Pur-lease. Don’t get me wrong, I like cycling, always have. A cycle ride with family is great fun, safe in the knowledge that I don’t have to be somewhere at a specific time and that a shower will be available if necessary at the end.. But having to leave the house even earlier than I do now means that there won’t be much point going to bed of an evening, plus getting to work all hot and sweaty and peppered with a fine coating of diesel fumes is not conducive to keeping you focussed on your job. You’ll just be sat at your desk with a burning face, slightly noxious aromas emanating from your armpits and in damp clothes.
So it means that as always, we’re stuck. There isn’t an alternative, the government and the motor industry knows this all too well. They’ve got us by our short and curlys and we’ve got to put up and pony up.
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