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Buying a used car often costs much less than it would to purchase a brand new model. Older vehicles also do not depreciate as quickly as new cars. However, you will need to obtain at least your state’s minimum levels of car insurance to be able to drive legally – whether you own a new car or a used one.
Not only can driving uninsured result in fines and license suspension, but it also can result in out-of-pocket expenses for repairs and liability in the event of an at-fault loss. A used vehicle requires insurance just as much as a new car, and it is important to learn about the coverage you need and its cost.
Insurance when buying a used car
Before you purchase a used car, you’ll need to think about your car insurance policy, which provides financial protection in case of covered accidents or other incidents on the road. In nearly every state, you’ll be required to provide proof of insurance before taking a used vehicle home from the dealership.
If you already have a car and a car insurance policy, most insurance companies offer automatic coverage for newly acquired vehicles, so you may not necessarily have to add a newly purchased car to your policy before driving it off the lot. However, you typically only have a short period of time (about 30 days on average) in which your current policy will cover the new vehicle, so you should add it to your policy as soon as possible.
However, adding the car to your current policy may not always be the cheapest route. In many cases, it may benefit you to shop around and get quotes from your current insurer and a handful of other insurance companies so you can compare coverage options and cost.
If you don’t have car insurance, you’ll need to shop for a policy, and you won’t be able to drive the car off the lot until you have a policy. Once you have an active car insurance policy in place on the used vehicle, you can take it to the car dealership as proof of insurance.
Types of coverage for used cars
Every vehicle must carry at least the legally required minimum insurance coverage. This amount varies from state to state. The coverage types may include:
- Bodily injury liability
- Property damage liability
- Medical payments
These coverage types do not apply to you or your vehicle, but instead are designed to cover damages you cause to other people and vehicles with your car. Some states also require motorists to carry uninsured and underinsured motorists coverage, to protect them in the event of an accident with an uninsured or underinsured driver. Depending on where you live, you may also be required to have personal injury protection (PIP), particularly if you live in a “no-fault” state. There are 12 no-fault states in the U.S., and if you live in one of them, you must have PIP insurance along with the minimum coverage.
Additional car insurance options include comprehensive and collision coverage. Comprehensive coverage pays for damage to your car caused by weather, theft, vandalism or hitting an animal, while collision coverage pays for damages caused by colliding with something, such as another car or a tree. Whether or not you purchase these coverages will depend on what you think is necessary for protecting your vehicle or if your used car is financed and requires these additional coverage types. Talk to an agent to determine your individual insurance needs.
Cost of insurance for used cars
Auto insurance cost is determined by a number of factors for both used and new cars. Aside from the insurance company itself, the state and city you reside in have an impact on your insurance premiums, as well as the kind of car you drive and your driving record. A clean driving record can make you eligible for certain discounts from some providers, even for used cars.
Age is also an important factor in car insurance premiums in most states. If you are a parent purchasing a used car for your teenage or young-adult child, be prepared for an increase in your auto insurance premiums. Adding a young driver to an insurance policy is considered a risk by insurance providers because young drivers have a higher rate of accidents than adults.
Different insurance providers have different prices, so comparing quotes from multiple companies is the best way to ensure you get the coverage you need without breaking the bank. As of 2022, the average cost of car insurance in the United States is $545 for per year minimum car insurance coverage and $1,771 per year for full coverage car insurance, according to Bankrate’s analysis of average rate data from Quadrant Information Services. Prices will vary by location, insurance company and your specific vehicle and driver considerations.
How to get insurance when buying a used car
When you buy a used car, one of the first things you need to do is get insurance. You cannot legally drive a vehicle without insurance. All drivers must meet the minimum insurance requirements in their state, but many insurance professionals recommend considering a policy with additional coverage or higher limits for better financial protection. And, if you finance your used vehicle, your lender will likely require you to purchase a full coverage insurance policy.
As you shop for your used car, you can shop around for the most affordable car insurance rates by getting personalized quotes from a range of insurers. Each insurance company calculates car insurance rates differently, and rates also vary based on the make and model of your car and other factors, so your rate will likely differ from one company to the next.
When you are ready to buy a car insurance policy, you will need to provide the company with the car’s VIN and the date of purchase. Make sure you understand what is and is not covered and ask for confirmation of your coverage. If you are purchasing a new policy, your insurance coverage should go into effect immediately once you have paid at least your first month’s premium. If you’re adding a vehicle to your existing policy, you won’t have to pay anything when adding the car because the increased cost will be wrapped up in next month’s bill. In turn, you should be able to get proof of insurance and start driving your car.
Frequently asked questions
Whether your car is used or brand new, you will need at least the minimum coverage to be able to drive it legally. Drivers who are financially able to purchase higher liability limits should do so, as minimum coverage does not guarantee that all expenses from a loss will be covered by the insurance.
In the United States, the average cost of car insurance is $545 per year for minimum coverage and $1,771 per year for full coverage, according to Bankrate’s analysis. However, the cost of car insurance will differ from one insurer to another and will change depending on your personal rating factors and coverage needs, so your cost will almost certainly differ from the average cost of car insurance nationwide. To find the best car insurance rates for your specific situation, it may be helpful to shop around and get quotes from a number of different providers.