Why you’d be better off hitting a Maserati than my crappy Mazda

You know that feeling of nervousness you get when you find yourself driving near a really expensive car? It’s like involuntary fear you might somehow, spontaneously hurt it, and it could cost you big time.

Well, you needn’t bother. As Sarah* just found out, you’re probably better off hitting a Maserati than a Mazda … well, my shitty Mazda anyway.

Bonk into one of these in the car park and you could get off easier when it comes to your insurance premiums.

Amid the Christmas craziness and crowds, and when I was inside the shopping centre, Sarah parked beside my 2006 Mazda 6 and sideswiped it.

It was a decent job, damaging three panels, for which I had two notes on my car when I returned: one from Sarah and one from a witness who had apparently chased Sarah down and first made her write note one. The repair quote came in at just over $3000.

This is a bunch less than the same repairs to a Maserati would have cost. But a new Maserati is worth between about $70,000 and $700,000, whereas $3000 is very close to the entire value of my car. Indeed, I was surprised when the insurer said the benchmark for one in good condition was $5000.

Now, a car is considered a write-off when the cost of the repairs is more than its value (or if repairs would compromise safety). Whatever sets the insurer back less is what they’ll roll with … and my car is essentially now a rolling rubbish bin.

Any “at-fault” write-off sees you deemed a far riskier driver, and insurers look more at the person than the value of that write off.

All that means that the cost of the same repairs relative to the value of an old, inexpensive car will always see it far closer to being written off than a prestige vehicle.

My car – very – narrowly avoided being written off. But why did that matter to Sarah? With regards her excess for the claim, a Maserati or a Mazda made no difference. For either, it was $1000.

But here’s the thing: any “at-fault” write-off sees you deemed a far riskier driver, insurers look more at the person than the value of that write off.

So, Sarah came very close to paying far higher premiums for years to come. From just a low-speed car-park scrape. That’s on her ‘third-party property’ side of the insurance, which you take out to insure anything you hit.

Nicole Pedersen-McKinnon and her dinged-up Mazda.Credit: Nicole Pedersen-McKinnon

Meanwhile, the decision each year for anyone with a crappy car like me is whether to keep comprehensive cover as well: cover for your own car.

It might well be argued it’s no longer worth the annual cost when it could so easily be written off and the money you would get, so little. Because besides the at-fault write-off risk, there’s more that insurers don’t disclose in the fine print, too.

Make three claims in a year on a comprehensive policy? You will probably see it cancelled.

And if you pay your premiums monthly, you pay as you go, and if you at-fault write off that car, you will be liable for the whole rest of the contracted insurance year, first.

That initial policy – if your vehicle is written off – will be cancelled, and you’ll need to purchase a new one (note the only way you will get a refund if you cancel a policy is usually either if you haven’t made a claim at all or if the claim wasn’t for a total loss).

The premiums for that new policy will also – again – go up significantly.

But realise there is one factor that influences what you pay to insure the same car more than anything else: where you live. A high crime or flood risk will necessitate a higher premium (no policyholders see the internal post-code premium maps though).

And that’s even more so if your car is not ‘garaged’ there but outside or on the street.

Naturally, the value of your car matters to your premium. But does it matter the value of any car you write off? The answer is very little. What matters is the write-off itself.

Finder research shows that having an at-fault claim can add between 11 per cent and 28 per cent to your premium, depending on the insurer. The average among the providers the data house looked at was about 20 per cent. That’s whether it’s a Mazda, or a Maserati.

But, lest you’re tempted to start driving like a dodgem car around prestige vehicles, hit one and its owner may well get a lot more cranky.

*Not her real name

Nicole Pedersen-McKinnon is author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.

• Advice given is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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