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Car Insurance - Mathematician/Darts Player needed


Smack

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I could have worked this out easy back before I scrambled my brain but I'm struggling with it now. Hoping that someone will enjoy the challenge 😁

 

I'm trying to figure out the best value due to getting a new car mid policy.

 

Current insurance cost £316. Runs from May 30th 2019 - May 29th 2020. To swap it over to my new car and add breakdown cover will cost £49. If I cancelled the policy I'd get £131 refunded after fees. Not bothered about the no claims for this full year, plenty in the tank.

 

I've got another quote for £310 but with cashback of about £30 this is effectively £280. Cover from Nov 1st 2020 - October 31st 2021. Same cover.

 

Which option is the best value? 

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39 minutes ago, Sooperstar said:

Second option has a cost of 23 quid per month. 1st option is 30 quid per month for your remaining 6 months.

Thanks. I thought a bit more about it.

 

So I've paid £311 for 12 months.

I've used 5 months at £26 a month.

7 months remaining are worth £180ish.

Add the £49 fees that's £230 for 7 months, £31 a month.

But I only get £130 if I cancel. 

Creates a ghost £100.

 

New policy is £23 a month. 7 months costs me £160.

 

So for the same cover and to compare like with like I think I need to add the ghost £100 on to the £160 which gives £260 for 7 months. £37 a month. 

 

Is there an error in there? Pretty sure there will be.

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22 minutes ago, Smack said:

Thanks. I thought a bit more about it.

 

So I've paid £311 for 12 months.

I've used 5 months at £26 a month.

7 months remaining are worth £180ish.

Add the £49 fees that's £230 for 7 months, £31 a month.

But I only get £130 if I cancel. 

Creates a ghost £100.

 

New policy is £23 a month. 7 months costs me £160.

 

So for the same cover and to compare like with like I think I need to add the ghost £100 on to the £160 which gives £260 for 7 months. £37 a month. 

 

Is there an error in there? Pretty sure there will be.

You have paid the 1st one, so that money is gone. The true cost of keeping the policy to yourself is what you could get back from it, plus the 49 quid, which is £180 in total. There are 6 months left on the policy so that's where the £30 per month comes in.

 

Your new policy is easy, 12 months and comes out at £23.33 per month. 

 

Keeping your existing policy with the additional cover effectively costs you £42 more over the next 6 months than changing policy.

 

You could have paid £1m for your existing policy and it would still make sense to change.

Edited by Sooperstar
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2 hours ago, Sooperstar said:

You have paid the 1st one, so that money is gone. The true cost of keeping the policy to yourself is what you could get back from it, plus the 49 quid, which is £180 in total. There are 6 months left on the policy so that's where the £30 per month comes in.

 

Your new policy is easy, 12 months and comes out at £23.33 per month. 

 

Keeping your existing policy with the additional cover effectively costs you £42 more over the next 6 months than changing policy.

 

You could have paid £1m for your existing policy and it would still make sense to change.

Ah ok, thanks! I see what you mean now. It's actually got 7 full months to run, from now until the end of May. That would make the original about £25.70ish a month. So option 2 is still better but not by much. Thanks again for helping me out.

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10 hours ago, Smack said:

Ah ok, thanks! I see what you mean now. It's actually got 7 full months to run, from now until the end of May. That would make the original about £25.70ish a month. So option 2 is still better but not by much. Thanks again for helping me out.

No worries.

 

Can't believe I ****ed up the easiest part of it all...counting to 7!

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£49 and your new car is covered for 7 months.

 

Or

 

£280 minus £131 which is £149 and it's covered for 12 months. Effectively £86.91 for 7 months cover.

 

That's how a darts player would work it out.

 

 

 

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11 minutes ago, graygo said:

£49 and your new car is covered for 7 months.

 

Or

 

£280 minus £131 which is £149 and it's covered for 12 months. Effectively £86.91 for 7 months cover.

 

That's how a darts player would work it out.

 

 

 

 

Even taking cost over 18 months makes option 1 better than 2 to a darts player.

 

Option 1.  £49 + £280 = £329 (19 months) or £17.32 per month.

 

Option 2. £280 x 2 minus £131 = £429 (24 months) or £17.88 per month.

 

The difference narrows over time but option 2 will always be more expensive than option 1. (to a darts player)

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Just noticed your reply. I went with a new policy before you posted and I'm glad I made a decision, I'd probably still be doing back of the fag packet arithmetic otherwise. I guess I'll always have lingering doubts about this sorry episode 😁

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