Introduction
When renewing your car insurance each year, one of the biggest factors that many overlook is the age of the vehicle. Whether your car is brand new or over 10 years old, its age plays a major role in determining your premium rate and protection value. This article will help explain how the car age affects insurance price.
1. Car Age and Market Value
Generally, the older a car gets, the lower its market value — thanks to depreciation.
For example:
- 1st year: depreciation around 10–15% of its original price.
- 5th year: depreciation can reach 40–50%, depending on brand and condition.
This market value is crucial because insurers use it to decide both your maximum coverage and compensation in case of theft or total loss.
2. Car Age and Premium Rate
Insurance premiums don’t just depend on market value — they also reflect the risk of damage and repair costs.
Typically:
- New cars: Higher premiums, since the car’s value and replacement parts are more expensive.
- Older cars: Premiums can be lower, but only up to a point — as breakdown and accident risks rise with age.
If your car is too old (say, over 15 years), some insurers may only offer Third Party, Fire & Theft (TPFT) instead of Comprehensive coverage due to safety and low-value concerns.
3. How Age Affects Coverage Type
Your car’s age also determines which type of insurance fits best:
- Under 5 years: Best to go with Comprehensive coverage since the value is still high.
- 5–10 years: Comprehensive still works, but check if it’s worth it based on market value.
- Over 10 years: Usually cheaper to take Third Party, Fire & Theft, since the car’s value has dropped significantly.
4. Agreed Value vs Market Value
A car’s age also influences which valuation method is best:
- Market Value: Compensation follows the car’s current market price (recommended for older cars).
- Agreed Value: Fixed value agreed upon in advance (better for newer or high-value cars).
For example, if your 3-year-old car still holds strong value, go for Agreed Value to avoid losing out during a claim. But if your car is 8–10 years old, Market Value is usually more practical.
5. How to Check Value & Estimate Premium
To make sure your chosen value is accurate, you can check it on platforms like Bjak —
where the automated system estimates your premium based on:
- Car age,
- Brand and model,
- Owner’s location, and
- Chosen coverage type.
This helps you avoid becoming overinsured or underinsured when renewing your policy.
Conclusion
In short, car age affects the insurance price and it’s a key factor that shapes your coverage, premium rate, and the type of policy that fits you best. An older car doesn’t mean it can’t be protected; it just needs a smarter approach. With Bjak, you can easily check your car’s market value, compare prices, and renew insurance with the right plan for your vehicle’s age — fast, secure, and fully approved in Malaysia.
Read More:
Why Many Drivers Don’t Have Valid Car Insurance
