How to Get the Best Deal on Used Car Insurance

INSURANCE - CAR INSURANCE
It's often, but not always, cheaper to insure a used car than a new car.
Last updated April 3, 2023 | By Lindsay VanSomeren Edited By Melinda Sineriz
Smiling man driving a car

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If you're trying to buy insurance for your used car, it's important to keep a few things in mind to help you cut down on the cost. You'll be buying the same type of insurance that new car owners purchase too, but your price might be very different depending on several factors.

In general, car insurance rates are lower for used cars versus new cars — but that's not always the case. In addition, if you're driving a used car, you may be able to drop some types of car insurance that are recommended or even required for many new car owners, such as collision insurance.

Find out how much used car insurance might cost and how to plan a good strategy for getting the cheapest insurance for your situation.

In this article

How to buy used car insurance

Before you buy used car insurance, there are a few things to know. Each state sets the requirements for minimum coverage, and you'll need to purchase a policy with at least this amount of coverage for every car you have.

Many people choose higher coverage amounts, though. If you're not sure whether that's a good idea for you, chat with a financial advisor or independent insurance agent who can walk you through these decisions.

Tip
An independent insurance agent could be especially valuable if you're having a hard time getting approved for coverage, such as if you've had DUIs under your belt or you're looking to get insurance for your restored Shelby Mustang or another classic car.


You can also contact insurance providers directly to purchase a policy. If you’re looking for the best deal, contact multiple insurance companies to compare quotes. You could also use a reputable insurance comparison site such as The Zebra or QuoteWizard.

If you don't already have car insurance, you'll need to get it ASAP. If you already have car insurance on a vehicle, you may be covered under your policy for a grace period.

The exact length of the grace period varies depending on your insurer and where you live. Many insurers allow a 14-day grace period during which your new vehicle is covered by your policy.

If you're considering buying a new (to you) car, it's a good idea to check your policy to be absolutely certain about the grace period length. Then contact your insurance company or agent to add your used car to the policy as soon as possible.

Tip
If you’re purchasing your used car from a dealership, you may be required to show proof of insurance before you take ownership of the car. If you’re buying a car from a private seller, you’ll want to obtain insurance before driving the vehicle if you don’t already have an auto insurance policy.


How much is used car insurance?

The monthly premium for a used 2013 Honda Accord was $123 when averaged across eight common car insurers, according to a 2022 study from The Zebra. The average monthly premium for the same car but in a newer 2019 version was $141, in comparison — $18 more per month.

Broadly speaking, used cars are cheaper to insure than new cars. However, many factors influence your car insurance costs, so it's not uncommon to have a newer car that's cheaper to insure than an older used car.

Here are some of the factors that affect how much your used vehicle insurance costs:

  • Location
  • Your age
  • Your gender
  • Theft potential
  • Car engine size
  • Your credit score
  • Coverage options
  • Deductible amount
  • Your driving record
  • Car safety features
  • How much you drive
  • Car make and model
  • How much repairs cost
  • Electric or gasoline engine

Additionally, every car insurance company has a different formula for how it calculates your insurance costs. It's actually quite easy for a newer car to have a lower premium than a used car, given the right circumstances.

Types of coverage

You're required to carry certain types of car insurance and amounts of coverage depending on your state. Most states require you to carry bodily injury and property damage liability coverage, for example. But there are other types of coverage too.

Here are common car insurance coverage options:

  • Bodily injury liability: This helps to pay the medical bills and lost income for other parties if you’re involved in an at-fault accident. It may also pay for a lawyer to defend you in court if necessary.
  • Property damage liability: This assists in paying to repair any damage you cause to other people's property, such as rear-ending a car or taking out someone's expensive curbside landscaping.
  • Underinsured motorist: This helps to protect you if you’re involved in a collision, and the other party doesn't have enough coverage to pay for the full damages you're owed
  • Uninsured motorist: This one takes it a step further and helps to cover you if you're hit by someone without any car insurance at all, which is unfortunately common.
  • Personal injury protection: Required by some states, this assists in paying the medical bills, lost income, funeral expenses, and even the cost of hiring domestic helpers if needed for you and anyone else in your car. You're covered whether you caused the accident or not.
  • Collision: This helps to fix your vehicle if it's involved in a collision with another car or an object such as a lamppost (wildlife strikes are not covered, however). Collision coverage covers you whether you caused the accident or not.
  • Comprehensive: This assists in repairing or replacing your car if you hit wildlife or experience another non-collision-related mishap, such as weather-related events, riots, or natural disasters. Having a policy with collision and comprehensive insurance is sometimes referred to as a full-coverage policy.
  • Gap coverage: Gap insurance pays the difference between what insurance pays out and the amount you still owe on your loan if you financed your car and completely total it.
  • Rideshare coverage: Your insurance doesn't typically cover you when you're driving for rideshare apps, and the apps themselves may not provide enough coverage. Many insurers now offer a separate rideshare policy to help cover you.
  • Non-owner coverage: This helps to cover you while you're driving other people's vehicles if you don't actually own one yourself.

Warning
Keep in mind that you're only covered up to the limits of your car insurance policy. If you buy a state-minimum policy with $20,000 in coverage for bodily injury, for example, and you cause an accident with $100,000 worth of damage, you may be on the hook for the remaining $80,000 (minus your deductible).


How to save money on used car insurance

Given that car insurance makes up a big chunk of your total car ownership costs, it makes sense to try and save money. Luckily, there are a lot of tried-and-true ways to do this. Here are a few things that people commonly do:

  • Drive safely. The biggest thing you can do to save money is to drive safely. Not only can you avoid paying your deductible at all by doing so, but you'll avoid tickets, lawsuits, and the rate increases that typically come with accidents.
  • Shop around. If you only get insurance quotes from a couple of different companies, you can't be sure that you're really getting the best deal. Instead, set aside some time to get a quote from as many companies as you can.
  • Improve your credit score. Many insurance companies charge more if you have poor credit, though this is prohibited in Massachusetts, Hawaii, and California.
  • Consider insurance costs when car shopping. Different cars will be charged different rates, and if you want to be sure you're not buying a high-cost vehicle, you could get a quote from the same insurance company to compare insurance costs.
  • Choose the highest deductible you can afford. The higher your deductible, the lower your car insurance premium. But you want to be sure you can afford to pay your deductible if needed, so keep that in mind as well.
  • Consider dropping collision and comprehensive coverage. Lenders typically require you to have collision and comprehensive insurance if you’ve financed your car. If your car is paid off, you may want to drop these coverages if it makes financial sense for you.

Common insurance discounts

Most auto insurance companies offer a range of discount options to help you lower your cost even further.

Here are a few common car insurance discounts:

  • Having multiple cars insured with the same company
  • Being a safe driver
  • Being a good student
  • Installing anti-theft devices
  • Completing a defensive driving course
  • Being a college student away from home and not bringing your car
  • Installing devices or using apps that record your driving habits
  • Bundling together other types of insurance, such as life insurance and homeowners insurance

How to choose an insurance company

There are so many different car insurance companies that it can be tough to make a decision. Here are a few things to keep in mind that could help steer you to the right company:

  • What rates can it offer you? The lowest price is the biggest factor for many people, and the only way to know that is by getting a quote.
  • What discounts does it offer? Some auto insurers offer more discounts than others. Of course, this factor only modifies the cost, but if you spot a lot of potential discounts you might qualify for, then it's a good bet that it'll be on the cheaper side.
  • Does the company offer an app? Many insurers offer an app that you can use to show proof of insurance, report a claim, and manage your account. If you prefer to do things on the go, try to avoid companies that don't offer apps.
  • Do you prefer working with an agent? Many insurers have independent agents in communities all over the country. If you prefer working one-on-one with someone rather than doing it all online, make sure you pick one of these companies.
  • What is its reputation for customer service? Check whether the company keeps customers in your area happy by checking its J.D. Power ranking.
  • How financially strong is the company? Car insurance companies often check your credit, and you can do the same for them too by looking up their AM Best ratings. This can clue you in on the likelihood that you'll get your money should you ever need to file a claim.

FAQs

Is insurance less on a used car?

Car insurance is often, but not always, cheaper for a used car. It depends on a lot of factors such as the safety features of your car, how expensive or difficult it is to repair, where you’re located, and more.

Who is the cheapest to get car insurance with?

The cheapest insurer will vary based on your situation. Insurers consider your age, gender, vehicle make, model year, and more to determine your rate. The best way to find cheap coverage is to get multiple quotes.

What is the most expensive type of car insurance?

Liability insurance is the most expensive type of car insurance. According to data from the NAIC, the average annual cost of different types of insurance in 2019 was $650 for liability insurance, $381 for collision insurance, and $172 for comprehensive insurance.

What is a deductible?

A deductible is the amount of money you pay before insurance kicks in. For example, if you have a $500 deductible and you get in an accident that causes $1,000 in damage, you'll pay $500, and your insurance will pay $500.

Bottom line

Car insurance prices are extra-tricky to figure out because it varies so much between companies. The only way to know if you're getting the best auto insurance rates is to shop around with as many companies as possible. We keep tabs on the best car insurance companies to give you a head start.

  • You could save up to $500 with some companies
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Lindsay VanSomeren Lindsay VanSomeren is a freelance writer based in Suquamish, Washington. Originally a wildlife biologist, Lindsay became passionate about helping others learn to live their best lives after seeing how positive money habits made a big difference in her own life. Her work has appeared in many outlets like Credit Karma, The Balance, FICO, Forbes, and more.