Choosing Car Insurance for Used Cars: Recommended Value-for-Money Plans

(Photo credit: Poonawalla Fincorp)

Buying a second-hand car is a smart financial move, but it often brings confusion regarding insurance coverage. Should you try to get Premium Type 1 coverage for an older vehicle, or downgrade to Type 2+ to save costs? This article analyzes how to select the right insurance plan for a used car based on vehicle age, coverage value, and budget.

1. Can You Get Type 1 Insurance for a Used Car?

The answer is "Yes," but it depends heavily on the "Car's Age."

• Cars aged 1 - 7 years: Most insurers still offer Type 1 (First Class) insurance. This provides maximum coverage, including collision without a third party (e.g., scratching a wall or hitting a pole). This is ideal for less experienced drivers or cars in pristine condition.
• Cars aged over 7-10 years: Insurers typically stop offering Type 1 coverage for new policies. However, if you are renewing an existing policy with a good claim history, some companies may extend coverage up to 15 years.

Recommendation: If your used car is under 5 years old and you want to ensure it stays in showroom condition, paying the premium for Type 1 is still the best option to cover minor scratches and aesthetic damages.

2. Type 2+ Insurance: The "Hero" for Used Cars

For vehicles aged 5 years and older, or for experienced drivers, Type 2+ (Second Class Plus) is often the most cost-effective choice in the market.

• Coverage: Covers collision with other land vehicles (car-on-car), Theft, and Fire.

• Why it is worth it: Premiums are significantly lower than Type 1 (often 40-50% cheaper), yet it provides substantial coverage for major accidents and theft. You only lose coverage for minor scratches where no other vehicle is involved—damages that used car owners are often less concerned about compared to new car owners.

3. Choose "Garage Repair" to Lower Premiums

Insurance policies offer two types of repair facilities: "Dealer Repair" (Official Service Center) and "Garage Repair" (Contracted Workshop).

• Used cars should opt for "Garage Repair": Since most second-hand cars are already out of the manufacturer's warranty period, choosing a plan that specifies garage repairs can save you thousands of baht per year. Modern contracted garages have high standards, and replacement parts are readily available.

4. Calculating the Right "Sum Insured"

When insuring a used car, ensure the "Sum Insured" aligns with the current market value.

• General Rule: The sum insured should be approximately 80% of the current market price for that specific model.
• Caution: Do not "Over-Insure." If a total loss occurs (the car is written off), the insurance company will compensate based on the actual market value at the time of the accident, not necessarily the inflated figure written in the policy if it is unrealistic.

Conclusion

• If the car is under 7 years old and you want full protection: Choose Type 1.
• If you prioritize value and are a confident driver: Choose Type 2+ (Best value for used cars).
• If the car is very old and you only need liability protection: Choose Type 3+.

Buying a used car is about maximizing value; your insurance choice should reflect that. It should not be an excessive financial burden, but it must sufficiently cover major risks like heavy collisions and theft.

References:

• Thai General Insurance Association (TGIA): Guidelines on Sum Insured Determination (www.tgia.org)
• Office of Insurance Commission (OIC): Motor Insurance Policy Conditions (www.oic.or.th)

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