Used Car Insurance

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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

If you’ve been previously uninsured, buying a car before purchasing insurance might seem a reasonable choice, but to be on the safe side your insurance shopping should start the moment you consider buying a vehicle. Knowing the cost of insurance for the car you may purchase will factor into your decision-making process. Failing to get quotes for insurance before you buy a used car could result in an unpleasant surprise; it would be a shame to save money on your car purchase only to find out that you cannot afford the insurance.

If you already have car insurance, you can likely add a different vehicle to your policy as soon as you have the vehicle identification number (VIN). Most insurance companies offer automatic coverage for newly acquired vehicles, so you do not necessarily have to add a newly purchased car to your policy before driving it off the lot, but you should add it as soon as possible.

However, be sure to let your agent know you are purchasing a car, just in case your particular insurance carrier does not provide automatic coverage for newly acquired vehicles. If you know your car’s year, make and model, you may be able to get a quote online or through your provider’s app for adding the vehicle to your policy.

Insuring an older vehicle can often be cheaper than insuring a new car. This is because used cars do not have the same value as new models, have a lower likelihood of theft and don’t always require financing. However, if the model you are buying has had a high rate of claims in the recent past or lacks essential safety features, the premiums might be on the higher side.

Types of coverage for used cars

Every vehicle must carry at least the legally required minimum liability insurance. This amount varies from state to state. The coverages include:

  • Bodily injury
  • Property damage
  • Medical payments

These coverages 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 motorist. Depending on where you live, you may also be required to have Personal Injury Protection, particularly if you live in a “no-fault” state. There are 12 no-fault states in the US, and if you live in one of them, you must have PIP insurance along with the minimum coverage, which can increase the cost of insurance.

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. 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. Regardless of the type of car you have, your location or your insurance provider, if you are under the age of 25 your premiums will be higher than they would be for older drivers. 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. The average annual cost of car insurance in the United States is $563 for minimum and $1,738 for full coverage. Prices will vary by location, insurance company and your specific vehicle and driver considerations.

Frequently asked questions

Do I need insurance for a used car?

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.

How much is used car insurance?

In the United States, the average cost of car insurance is $563 per year for minimum coverage and $1,738 per year for full coverage. Prices will differ from one insurer to another and will change depending on your specific needs, but there are ways to help lower your premium. As always, if you are unsure of what coverage you need, talk to an agent for guidance.

Methodology

Bankrate utilizes Quadrant Information Services to analyze rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverages that meet each state’s requirements. Our sample drivers own a 2018 Honda Accord, commute five days a week and drive 12,000 miles annually.

These are sample rates and should be used for comparative purposes only. Your quotes may be different.

About the author


Cynthia Widmayer

Cynthia Widmayer

Cynthia Widmayer has over two years of experience as an insurance and personal finance writer. She covers home, car and life insurance products for Bankrate, the Simple Dollar, and Coverage.com, among others.