Insurance for older cars

Is car insurance cheaper for older cars?

Whether or not car insurance is cheaper for older cars depends on several factors. While new cars may be more expensive to insure due to their higher value, older cars can also be costly. A vehicle that holds its value over time may be more expensive to insure than one that depreciates quickly. However, premiums for each make and model often differ between insurance companies because each uses its own rating structure.

Although they may have a lower value, older cars may also have expensive parts that could make repairs expensive. The older a car gets, the harder it may be to source these parts for repair, which can also drive up the cost of car insurance for older cars. 

Additionally, older cars may not have as many safety features as newer models. Features like blind-spot monitors can help prevent accidents, while technologies like automatic emergency braking and advanced airbag systems work to mitigate the outcomes if an accident does occur. As a result, the higher likelihood of an expensive insurance claim for your older car can cause your auto insurance costs to increase, or at least not decrease as much as you would think over time as it relates to the car’s depreciated value. The same thought process can also be applied to security and anti-theft features.

Which type of insurance is best for old cars?

When depreciation has taken a toll on your vehicle, it’s time to consider what optional physical damage coverage options are still financially smart to maintain. Here are a few coverage options that could be subject to review in your old car insurance policy:

• Collision coverage: This covers damage to your car in an at-fault crash. It may not make sense to keep if your car’s value is low, as the cost of the coverage may exceed the amount you’d receive in a claim.
• Comprehensive coverage: This covers non-collision damage, such as theft, vandalism, hitting an animal or weather-related damage. While comprehensive is generally cheaper than collision coverage, it could be dropped if the vehicle’s value is minimal, as the cost of repairs might outweigh the insurance payout.
• New car replacement coverage: This coverage replaces your totaled car with a brand-new version of the same make and model rather than paying out the depreciated value. It's typically available only for cars under a few years old and becomes unnecessary for older vehicles since it’s designed to cover newer cars that haven’t depreciated significantly yet.

You may not need any of the above coverage if you can afford to fix or replace your older car without insurance. However, a general rule of thumb used by insurance professionals in deciding on whether to maintain physical damage coverage is the 10 percent rule. In this case, when the annual coverage costs over 10 percent of the car’s replacement value, it may not be worth keeping the coverage. Speaking with a licensed insurance professional may help you weigh the trade-offs of any policy adjustments.

In most cases, you can choose whether to continue paying for these optional coverage types, but the decision may depend on other factors. If you have a loan on your old car, your lender may require you to carry these coverage types to satisfy the terms of your loan or lease agreement.

State minimum insurance

No matter how old your car is, you are required to carry state minimum liability limits or prove financial responsibility to register it and legally drive on roads. Each state has its own requirements, which must be met and maintained for as long as the car is registered. If you can afford more than the state minimum liability insurance, it can provide greater financial protection and is recommended by most insurance experts.

State minimum insurance is the least amount of liability coverage you must have to register and drive your car. Some states also require personal injury protection (PIP) or medical payments and uninsured motorist coverage.

Insuring classic cars vs. older cars

A car being old doesn’t automatically make it a classic car, but alternatively, classic cars do generally need to be old. An older car can typically qualify for classic car insurance if it's 20 years or older and has a collectible value that exceeds its original sale price. Even with added features not offered in standard older car insurance, classic car insurance is usually cheaper, although the policy may have mileage restrictions and storage requirements. 

Some insurance companies, like AAA and State Farm, underwrite classic car insurance policies. Other insurance companies partner with specialized classic car insurers, such as Hagerty and American Collectors, to provide coverage. You are also welcome to purchase a classic car insurance policy directly from one of these specialized providers if you prefer.

Frequently asked questions