Is used car insurance cheaper?

Many drivers buy a used car because it’s significantly less expensive than buying a new vehicle, so it seems natural that insuring a used car would cost less as well. However, insuring a used car isn’t always cheaper than insuring a new one — whether a car is used or new is only one of many factors that affect the price of car insurance. Insurance companies may see a used car as a higher risk. And monthly payments may be more expensive because it doesn’t make financial sense to choose a plan with a higher deductible.

The hidden costs of insuring a used car can be frustrating since driving a used car was supposed to save you money, not increase your insurance rates. But before you decide to trade your used car in for a newer ride, let us show you how to save on used car insurance. Read on to find out what options you have for buying insurance for a used car, how to save when insuring your used vehicle, and when insurance for a used car is cheaper than new car insurance.

Looking for insurance for your used car? Enter your ZIP code in our free online tool to compare rates and find coverage that’s right for you.

When is insuring a used car cheaper?

The short answer is that insuring a used car is usually cheaper than paying to insure a new car. (For more information, read our “Best Cheap Car Insurance Companies“).

There are two main reasons behind this. First, the parts need to repair an older car are typically more widely available and less complicated than the parts needed to fix newer models, making them cheaper. Second, insurance companies don’t pay as much to replace a used car that’s totaled since cars depreciate in value over time. In other words, a used car is worth less and is less expensive to fix, so insurance companies will generally charge you less.

With the above in mind, there are a few reasons why insuring a used car may cost more than you expected:

• Your policy’s deductible (the amount you pay for repair/replacement before insurance kicks in) is likely on the lower side since your used car isn’t worth as much as a newer car to begin with. Lower deductibles tend to come with higher monthly rates.
• Your used car has minimal safety features. Insurance companies will see your vehicle as a higher risk if it lacks safety features common to modern cars, like blindspot detection or a backup camera.
• You have a history of accidents on your driving record. If your driving record shows insurance companies that you’ve been at fault for accidents in the last few years, driving a car without a suite of modern safety features may lead them to consider you a high risk.

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What are the differences between insuring a new and used car?

While used cars are generally cheaper to insure than new cars overall, there are exceptions. Getting a clear understanding of how much it costs to insure any specific car means you’ll need to know its make and model. Newer cars generally cost more to repair or replace than older models, but this isn’t always the case. A particularly uncommon or complex used car can be expensive to insure.

A key difference between insuring a new and used car is how you look at your deductibles. With newer cars, your deductible will rarely exceed the cost of repairing the car, so a high deductible is the best way to save on your monthly payments, if you can afford it.

But used cars are a different story. Since many used cars are relatively cheap to repair, you’ll want to make sure your deductible isn’t too high, or else your insurance may not help you pay for some repairs at all.

According to Kelley Blue Book, a car insurance deductible can range from a few hundred dollars to $2,500.

For example, if you have a $500 deductible and your used car only requires $300 of repairs after a minor accident, you’ll have to pay all $300 out of pocket since your insurance only kicks in after you’ve spent at least $500 of your own money. If you have a newer car with more expensive parts, it’s likely that most repairs will cost more than your deductible, so it makes more sense to opt for a higher deductible with a lower monthly rate.

Where can you find insurance for a used car?

Most major car insurance companies make it easy to add a used car that you’ve recently purchased to your existing insurance policy. If you already have insurance, contact your insurance company to add coverage for your used car. If you don’t already have insurance, you can start comparing options today. Virtually all car insurance companies will cover used cars, so you have a wide range of options to choose from.

As far as what kind of insurance you should get for a used car, start with liability, collision, and comprehensive coverage. You may also want to look into personal injury protection and GAP insurance depending on your state and whether you’re financing your used car respectively.

When starting your search, you may find it helpful to compare the coverage offered by the ten largest car insurance companies in the United States:

• State Farm
• Geico
• Progressive
• Allstate
• USAA
• Farmers
• Liberty Mutual
• Nationwide
• American Family
• Travelers

How can you save money on used car insurance?

Saving money on used car insurance starts with taking the time to compare your options, so you can find the most affordable insurance that provides all the coverage you need. But even after you’ve obtained coverage, there are a number of ways you can save on car insurance.

Here are a few tips for saving on insurance for a used car:

• Install an anti-theft device in your car. Many insurance companies offer discounts for cars with anti-theft technology.
• Complete a defensive driving course. Depending on your state and insurance company, you may be able to get a discount for enrolling in a course that takes as little as 10 hours to complete.
• Enroll in a safe drive program. Optional programs like State Farm’s “Drive Safe and Save” and Allstate’s “Drivewise” use telematics devices to monitor your driving habits and give safe drivers discounts on their insurance. (For more information, read our “Car Insurance with Telematics (The Complete Guide)“).
• Bundle your insurance. Many insurance companies allow drivers to bundle home or renters insurance with car insurance, saving them hundreds of dollars each year.

Looking for more ways to save? Take a look at our other suggestions on how to reduce the cost of car insurance.

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What to Remember About Used Car Insurance

Used car insurance is usually cheaper than car insurance for a new vehicle. That said, a policy for a used car with a low deductible may be more expensive than one for a new car with a high deductible.

A used car with minimal safety features may also cost more to insure than a newer car with more safety features, especially if you have a history of accidents on your driving record.

To save money on insurance for a used or new car, you can try installing an anti-theft device, completing a defensive driving course, enrolling in a safe driver program, or bundling your car insurance with your home or renters insurance.

While used car insurance tends to be cheaper than insurance for a new car, how much you save depends on what insurance company and coverage you choose. Looking for the most affordable insurance for your used car? Find out how much you could save on insurance by entering your ZIP code in our free online quote tool.

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