The Price of Used Car Insurance—and Where to Get Your Best Deal

The Price of Used Car Insurance—and Where to Get Your Best Deal

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Getting car insurance is an essential part of buying a used car: You need insurance to drive a car in almost every state, even if you didn't buy it new. You don't have to buy coverage until after you purchase the vehicle, but it's a smart idea to get quotes before you make the purchase.

Unfortunately, used cars are not necessarily cheaper to insure than new cars. Depending on the car model and insurer you choose, you may see a very different insurance rates for an older vehicle. Some insurers charge less for older vehicles than new ones; others charge more. The only way to guarantee you're getting the lowest price for your used vehicle is to get quotes from several insurance companies.

How Much Does Used Car Insurance Cost?

People with older cars typically pay less for car insurance, though the main reason is not because older cars are cheaper to insure—for equivalent levels of coverage, we found that a 10-year-old car was only 3% cheaper to insure than a brand-new model.

The main reason older cars are cheaper to insure is because as older vehicles lose their value, drivers often decrease the level of insurance that they keep on the car.

Graph showing the relative costs of insurance over time when carrying full coverage and the legal minimum amount

People with older cars commonly remove comprehensive and collision coverages from their policies. For example, the owner of a new Camry might select a full-coverage policy for $988 over six months. Meanwhile, someone who owned a 10-year-old Camry may select minimum coverage for just $441.

It can be a sound financial decision to remove comprehensive and collision coverage on an older car, because the maximum payout you stand to receive from each goes down as the car loses value. For example, if your brand-new 2019 Camry was totaled in a crash, you would receive a payout that is close to the cost of a new car—approaching the $23,485 list price. But for a 10-year-old Camry, you'd only get enough to buy a comparable used car—around $7,000, according to Kelley Blue Book. And despite this difference in payout, the monthly cost of insurance doesn't decrease much as your car ages.

People buying new cars are also more likely to get a loan or lease, which often require full coverage as part of the terms of the financing. After the car is is paid off, the owner may choose to lower their coverage, saving money on their insurance bill in the process.

Why Older Cars Aren't Always Cheaper to Insure

While it might seem that an older car would be cheaper to insure than a new car given that it's worth less, that isn't always how it works. There isn't a consistent relationship between the age of a car and how much it costs to insure. And there are two separate types of policy to consider: full coverage policies and cheaper minimum coverage policies that simply meet the amount required by law.

Full Coverage Policies

Full coverage insurance includes comprehensive and collision coverage — these pay to repair your car after it's damaged in an accident. For full coverage car insurance, it's likely that the rates will differ between a new car and a used one. But whether a certain car becomes cheaper to insure as it gets older isn't consistent: It can vary by car model as well as insurer.

For example, we found that car insurance for a relatively common and inexpensive car, like a Toyota Camry, is likely to decrease with age: Two-thirds of insurers we surveyed reduced their rates for older vehicles. Part of this is because as cars age, replacement parts become cheaper and easier to get. However, the decrease in cost to repair could be offset by improved safety features of newer cars, like backup cameras and lane detection, which reduce the likelihood of serious collisions.

Graph showing how rates compare among insurance companies for differing ages of a Toyota Camry

And different insurers calculate this rate differently; for example, for our sample quotes, Geico and State Farm both offered quotes that were about 30% cheaper for an older model, while Farmers charged 33% more for an older car. This is why collecting multiple quotes for auto insurance can save you a lot of money when buying a used car.

Minimum Car Insurance Rates Stay the Same Over Time

For legal minimum coverage, however, prices stay nearly the same as your car gets older. That's because minimum coverage, which only includes liability protection (plus PIP and/or uninsured motorist coverage in some states), doesn't pay for repair of your car. As such, the age of the car you drive doesn't have much to do with the likelihood you'll make an insurance claim, nor the size of a claim you make.

Graph demonstrating how legal minimum insurance rates compare among companies for differing ages of a Toyota Camry

Insuring a Classic or Specialty Car

Classic and antique cars are insured completely differently than typical used cars. While you might be able to get a regular auto insurance policy for your classic car, owners often purchase specialty classic car coverage instead. This coverage is designed specifically for collectibles. For example, your car might be insured for a much higher value than its list price, but the policy might have very strict mileage limits. You might also consider specialty coverage if your vehicle has been heavily modified beyond the stock configuration, such as for racing.

The Best Car Insurance For Used Cars

We found that Geico offered the best rates for drivers looking to insure a used car. We collected quotes among three leading insurers and found that Geico had the best prices for a 10-year-old vehicle. The company had the best price for both legal minimum and full coverage.

Geico also offers mechanical breakdown insurance, which can help owners of used cars pay for repairs. However, only cars under 15 months old with 15,000 miles or less on the odometer are eligible, so if your used car is on the older side, it may not qualify.

Bar chart showing how Geico, State Farm and Farmers insurance rates compare for a 2009 Toyota Camry

State Farm deserves an honorable mention for giving the best discount for insuring an older car. A driver with a 10-year-old Camry will save 25% off the price of insurance for a new Camry by going with State Farm. This means State Farm is also worth a look, especially for drivers who have already gotten a good price from State Farm for a new vehicle. We always recommend drivers compare quotes from multiple insurers to ensure they are getting their cheapest rates on their car insurance policies.

How to Get Insurance When Buying a Used Car

Applying for car insurance for a used car works the same way as buying for a new car: you can get a quote online, or work with a car insurance agent to get a quote. You don't need to purchase car insurance before you buy a used car. Typically, you'll buy your policy after the old owner has signed over the title to you, but before you register it with your state's DMV. This is because almost every state requires you to have insurance coverage in order to register, or drive, your vehicle.

However, it's very important that you collect insurance quotes for the car you're interested in buying as part of your due diligence. Car insurance is one of the biggest ongoing expenses of owning a vehicle, alongside gasoline, maintenance and repairs. And the cost of insurance for a used car may not be what you expect, as car insurance isn't always cheaper for a used car than a new one.

When selecting a car insurance policy for a used car, you should choose coverages and limits for the vehicle differently than you would for a new car. You might elect to have a higher deductible on your comprehensive or collision coverages, or elect not to carry them entirely. This is because the highest possible payout for this coverage is much lower on an older, lower-value car.

On the other hand, you might want to add roadside assistance or emergency breakdown coverage, as cars are more likely to break down as they age.

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