Is It Cheaper to Insure a New Car or an Old Car?

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Rachel Bodine graduated from college with a BA in English. She works as an associate editor and writer for for over a year and enjoys creating content that offers expert advice on car insurance topics.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs...

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Reviewed byLeslie Kasperowicz
Former Farmers Insurance CSR

UPDATED: Mar 13, 2020

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Insurance companies look at a number of factors to calculate your insurance prices. The age of the car is one of many factors.

It’s typically cheaper to insure an older car. Older cars are less valuable. They don’t have the same safety features as newer cars.

However, insurance prices can vary widely between new and old vehicles. Today, we’re explaining everything you need to know about the difference in the cost of insurance between a new car and an old car.

The Value of the Vehicle is an Important Factor in the Cost of Insurance

Older vehicles are typically cheaper to insure because they’re less valuable than newer vehicles.

Due to depreciation, your 2012 Honda Civic has a much lower value than a 2018 Honda Civic, for example.

When your car is less valuable, it means your insurance company has a lower liability. The cost of repairing your vehicle might roughly be the same amount of money. However, your insurance company is only liable to cover the replacement value of your vehicle. It’s easier to “total” an older car, which means the repairs exceed the replacement value.

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You Can Drop Collision and Comprehensive Coverage on Older Vehicles

You may be comfortable dropping collision and comprehensive insurance from your insurance policy.

You can maintain the cheapest level of car insurance – basic liability insurance – without paying a high monthly premium. The reason is simple: if you get into a collision, it’s not worth spending a lot of money to repair your older vehicle.

Dropping collision and comprehensive coverage from your insurance policy can often drop the price of your monthly premium in half.

Newer Vehicles Can Be More Expensive to Repair

old car vs. new car insuranceNewer vehicles are more expensive to insure for a number of different reasons.

First, there’s the value of the vehicle. Newer vehicles tend to be more valuable than older vehicles. That means the insurance company is responsible for covering repairs up to a higher amount.

Other factors also play a role. Newer vehicles have safety features like backup cameras and automatic braking, for example, that can significantly reduce the risk of accidents. You might assume this leads to cheaper insurance costs – but that’s not always the case. These new safety features can be costly to repair and replace. If you damage your automatic braking system in a fender bender, for example, then your insurance company might need to spend thousands of dollars to replace it.

Older Used Cars Are More Dependable Than Ever Before

There’s a stigma against buying an older, used vehicle. It’s understandable: buying a new vehicle is attractive. It feels cool to be the first person to own your new vehicle. You know the complete driving history of the vehicle and can relax knowing it’s under warranty coverage.

However, the stigma against older, used vehicles is starting to disappear. Today, cars are built better than ever before. They’re more reliable. They can drive 100,000 miles or more before needing major repairs. You can buy used cars from dealerships that provide complete inspections and certified pre-owned vehicles.

Put simply, a used car that has been regularly maintained with oil changes, tire rotations, and brake checks provides much better value than a brand new vehicle. A brand new vehicle loses 30% of its value within the first year of ownership. In fact, it loses approximately 20% of its value the moment you drive it off the lot.

There’s also the price of insurance to consider: if you’re on a budget, then an older vehicle is significantly cheaper to insure than a newer vehicle. You’ll save money when buying the vehicle and save money every month on your insurance premiums. As long as you avoid major repairs for the near future, you’re going to come out ahead.

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Older Cars Versus Classic Cars

When we talk about insuring an older vehicle, we’re talking about insuring ordinary older vehicles. It’s cheaper to insure an older vehicle than a newer vehicle. Generally speaking, it’s cheaper to insure a 10 year old Toyota Camry than a 3 year old Toyota Camry.

This rule changes when we’re talking about classic cars. Classic cars often have their own classic car insurance. Talk to your insurance company to find out if your car qualifies for special insurance.

In general, to qualify for classic car insurance, your classic vehicle needs to be a certain number of years old. It also needs to be a secondary vehicle – which means you don’t drive it very often. Some classic car insurance companies also require you to park your vehicle in a secure location – like a locked garage.

Classic car insurance rates are 40% less, on average, than standard auto insurance rates.

Conclusion: Plenty of Other Factors Also Impact your Insurance Rate

Ultimately, the age of your vehicle is one of many different factors used to calculate the cost of your car insurance.

Other factors that may be more important include your marital status, driving record, vehicle usage, gender, and age.

Compare insurance quotes today to get the cheapest car insurance on your old or new vehicle.

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