Find Cheap Auto Insurance Quotes in Your Area
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 smart 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 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 make sure 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.
Find Cheap Auto Insurance Quotes in Your Area
People with older cars commonly remove comprehensive and collision coverage 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 and choose liability-only car insurance. This is because the maximum payout you stand to receive from comprehensive and collision coverage goes down as the car loses value.
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 paid off, the owner may choose to lower their coverage to save money.
Why older cars aren't always cheaper to insure
It might seem that an older car should be cheaper to insure than a new car, but that isn't always how it works. There's no consistent relationship between the age of a car and the cost to insure it. And there are two separate types of policy to consider: full coverage policies and minimum coverage policies that are cheaper since they 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, it's likely that the rates will differ between a new car and a used one. But whether or not a certain car becomes cheaper to insure can vary by car model as well as insurer.
For example, we found that car insurance for a common 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.
Insurers calculate their rates differently. In our sample, 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 minimum coverage, however, prices stay nearly the same as your car gets older, since liability-only protection (plus PIP and/or uninsured motorist coverage in some states), doesn't pay for car repair. 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.
Insuring a classic or specialty car
Classic and antique cars are insured completely differently than used cars. While you might be able to get a regular 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 from three leading insurers and found that Geico had the best prices for a 10-year-old vehicle 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.
State Farm deserves an honorable mention for the best discount for an older car. A driver with a 10-year-old Camry will save 25% compared to insuring a new Camry 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 recommend drivers compare quotes from multiple insurers to get the cheapest rates on their car insurance.
How to get insurance when buying a used car
When applying for car insurance for a used car, you can get a quote online or work with an agent, just as with a new car. Many insurers also allow you to buy car insurance online.
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. Almost every state requires insurance coverage in order to register, or drive, a vehicle.
It's very important to 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 gas, maintenance and repairs. Car insurance isn't always cheaper for a used car than a new one.
When selecting a policy for a used car, you should choose coverages and limits for the vehicle differently than you would for a new car. You might select a higher deductible on your comprehensive or collision coverages, or skip them entirely. This is because the possible payout for this coverage is 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.