Cars that motor insurers hate

Cedric E. Stephens, Gleaner Writer

Question:

I am a student at one of Jamaica’s leading tertiary institutions. Later this summer, I am planning to buy a Mitsubishi Evolution X. I am nearly 21 years old. Can you please tell me how much I would have to pay if I bought comprehensive insurance?

– S.S., Kingston 6

Answer:

The car that you plan to buy falls in a special class that motor insurers hate. When your gender and age group are added to that mix, most insurers are likely to refuse to insure you. They will argue that the risks posed by you and this vehicle are likely to increase the J$1.7 billion loss that the industry suffered last year. The few that may offer you insurance are likely to charge ‘an arm and two legs’ for the premium. This is a prediction, not a statement of fact.

Before I began to test my theory in the insurance marketplace, I decided to do some research. US News & World Report had this to say in a review based on its analysis of 26 reviews and test drives about the 2010 Mitsubishi Evolution X: “It is a spectacular performance vehicle. Budget shoppers who aren’t interested in burning rubber can save more than half the Evo’s sticker price by opting for the base Lancer instead ... . Serious performance-car shoppers can’t go wrong. It’s quick, nimble and all-around satisfying. Buy one, show up to your late-night illegal street race and watch the competition cop out.”

Reliable sources tell me that the local dealers sell the 2010 model for J$5.7 million. The price of the 2009 model was given as J$3.9 million to J$4 million.

I have assumed that you have had your driver’s licence for at least two years, have been driving regularly, and that you have a clean driving record. With this information in place, I began my shopping trip, which was also designed to test whether my prediction about the market response was accurate.

The market

The market now consists of nine insurers. I spoke with five of them. They wrote J$9.40 billion, or 82.4 per cent, of the J$11.3 billion in premiums that all motor insurers recorded during last year.

Four of the five listened to what I had to say and politely but unambiguously declined. The other person – someone I have known before you were born – could not stop laughing when I requested a quotation. His advice: I should wheel and come again.

The representative of another company told me that if you were older (25-plus) and were driving claims-free for three or more years, you would have stood a better chance to get insurance.

The Proceeds of Crime Act applies to insurance transactions. As a result, you will be required to provide, among other things, details about where you obtained money to buy the vehicle and how you will pay the premiums to prospective insurers. This is another of the hoops through which you would have to jump in order to get insurance.

My estimate is that comprehensive coverage would cost – assuming the lower of the two estimates of value – a minimum of J$500,000, or $1,369.86 per day. Is it worth paying this amount in premium for a vehicle that is “equipped with a 305 horsepower turbo-charged four-cylinder engine, all-wheel drive, and all the bells and whistles one would expect in a car designed to smoke the rally racing circuit”; that goes from zero to 60 miles per hour in 4.9 seconds? Frankly, I do not think so. But then, I am not a 21-year old man who likes to burn rubber.

Cedric E. Stephens provides independent information and free advice about the management of risks and insurance. aegis@cwjamaica.com. SMS/text message to 812-7233.