However, insurance plans can vary widely between used cars and new cars. You might choose to have different insurance on an older vehicle, for example. You might feel more comfortable dropping comprehensive or collision coverage – particularly on an older vehicle that isn’t worth repairing.
Typically, when insuring an old car, you’ll follow the same guidelines as insuring a new vehicle. Remember that it’s required by law for you to hold car insurance by the state. You legally need to maintain a certain bare minimum of insurance coverage. This is called basic liability coverage.
Additional insurance – like collision insurance and comprehensive coverage – is optional on all vehicles. Typically, you’d want collision and comprehensive coverage on a newer vehicle, but you may not need it on an older vehicle.
What’s the Difference Between New and Used Car Insurance?
Overall, new and used car insurance works in a similar way: you pay a monthly, semi-annual, or annual premium. In exchange for that premium, you receive insurance. Liability insurance protects other vehicles and drivers on the road – including the medical expenses of other drivers and any damage you cause to other vehicles or property.
Collision insurance and comprehensive insurance work the same way as well. Collision insurance covers the costs of repairing your vehicle after a collision, while comprehensive insurance protects against many non-accident-related events, including hail damage, vandalism, and theft.
There is one big difference between new and used car insurance: the cost. In most cases, a used car is worth less than a new car. A used car is older. It has more miles on it. It may have had multiple owners leading to lots of “wear and tear“. All of these things reduce the value of the vehicle significantly. When your vehicle is worth less, that means your insurance company has less liability. They will owe you less money in the event of a collision.
Obviously, it costs your insurance company more to repair a $50,000 truck than it does to repair a $3,000 Honda Civic from the 1990s. If you damage your 1998 Honda Civic, and the repairs cost more than $3,000, then your car is “totaled” and your insurance company will send you a bill for $3,000. If you damage your 2018 Ford F-250, then your insurance company may need to pay tens of thousands of dollars to cover your repair bills.
Used Cars Are Equally As Likely To Get Into an Accident as New Cars
Your insurance company will look at a number of different things to calculate your insurance rates. One of the most important things they’ll look at is your likelihood of getting into an accident. Are you a young and inexperienced driver? Or are you older and wiser with a long history of accident-free driving?
Interestingly, accident rates don’t significantly change between drivers of older or newer vehicles. With all other things being equal, your accident rate while driving a new vehicle is the same as your accident rate while driving an older vehicle.
All of this means that, in the eyes of your insurance company, the cost of liability coverage isn’t going to change. Generally speaking, the liability coverage for an older vehicle is going to cost the same as liability coverage for a newer vehicle. Remember: liability coverage has nothing to do with the value of your own vehicle. Liability coverage doesn’t protect your own vehicle.
The reason you save money when driving an older, used vehicle is that you can drop collision and comprehensive coverage from your car insurance. It may be in your best interests to get comprehensive insurance on a newer vehicle, for example, because you can’t afford to repair your $50,000 truck out of pocket. On an older vehicle, the worst that can happen is that you lose the value of the vehicle – say, $3,000 or less.
New Vehicles Might Have Advanced Safety Features
Accident rates are the same for used and new vehicles. However, there are some safety features found in newer vehicles that aren’t found in older vehicles. These safety features can affect your insurance rates.
Your insurance company loves safety features: the more safety features you have, the less you may pay for car insurance. A comprehensive security system, for example, makes it less likely for your car to be stolen. Anti-lock brakes reduce your chances of being in a collision. Side airbags and passenger seat airbags reduce the medical expenses for passengers involved in a collision.
Conclusion: Compare Insurance Quotes To Find the Best Used Car Insurance Today
Ultimately, there is no major difference between buying car insurance for a used vehicle and buying car insurance for a new vehicle.
The most important thing to remember is that the cost of your liability coverage isn’t likely to change. You have the same chance of being involved in a collision while driving a used vehicle as you do while driving a new vehicle. Liability coverage only covers damages you inflict on other people or property during a collision, so the value of your vehicle has limited effect.
Where you will save money, however, is on the costs of comprehensive and collision coverage. Your vehicle is less valuable, so comprehensive and collision coverage is cheaper. Plus, if you’re driving an older, used vehicle, then you may feel comfortable dropping comprehensive and collision coverage from your policy entirely. After all, it may not be worth it to repair your vehicle after a collision or other incident. Along with the value of your vehicle, your insurance company will take things like your driving record, age, and gender into account when calculating your premiums.
Regardless of whether you’re insuring a used or new vehicle, it’s crucial that you compare insurance quotes. Spend a few minutes comparing insurance quotes online. You can save hundreds of dollars on car insurance on your used vehicle.