Car warranties off the peg

Private motorists can now buy separate cover.

Motorists will shortly be able to buy warranties to cover cars that they buy privately against mechanical breakdown, thanks to a new scheme which is to be launched this week by Genesis Direct, a small Lincoln- based outfit, and backed by members of the Institute of Insurance Brokers.

Warranties, covering engines, clutch, transmission, drive systems, brakes, electrical and cooling systems, are available on new and second-hand cars bought from dealers.

More than half the seven million cars traded each year are bought at auction or privately and could not be covered by dealers' warranties.

Private buyers should already be able to buy a warranty following a service at an authorised dealer for their make of car, but few have done so. They will now be able to buy a warranty from an insurance broker, after they buy the car, when it has been serviced, and when it needs to be taxed.

Private motorists will also be able to buy the warranties when they want to sell and pass them on as an extra incentive to buyers of their cars. Cars which have been professionally serviced will be covered without further inspection. If no service history of a car is available, an inspection will be needed to qualify, however, costing perhaps pounds 45.

Four levels of cover will be available and premiums for popular makes of car will range between pounds 120 and pounds 278 a year. The cheapest rate covers cars of any age or mileage for individual claims up to pounds 250 within a year and 12,000 miles.

The most expensive premium available under the scheme provides cars up to three years old and with less than 40,000 miles on the clock with up to pounds 1,000 worth of cover on each claim within a year or 20,000 miles. Cover for parts subject to wear and tear will be based on the age and mileage of the car.

The make and value is immaterial for standard cars, according to Malcolm Moore, the general manager of the scheme's backers, but much higher rates, 2.5 times the basic rate, will apply on specialist cars such as Jaguars, Land Rovers, Range Rovers, Audi Quattros and other off-road 4x4 vehicles, and cover is not available for any modified and kit cars, American cars, luxury cars such as Rolls-Royce, Ferrari, Morgan and some models with a "history", such as the Triumph Stags.

Mr Moore hopes he might sell upwards of 30,000 policies in the first year. The motor trade is more sceptical. Similar schemes have blossomed and faded in recent years, perhaps because they were not actively marketed, perhaps because of disputes over the effects of wear and tear on replacement cover.