Getting the Cheapest Used Car Insurance
Getting the cheapest insurance for a used car often comes down to picking the right coverage. For most people, that’s going to mean buying liability-only car insurance. Liability insurance for a used car costs $956 a year, on average, for a common car like the Honda Civic.
Full-coverage car insurance may not have enough of a return on investment for a used vehicle, depending on its age. The average cost of a full-coverage insurance policy for a used car is $2,345 a year.
How much is used car insurance?
The cost of insurance on a used car is based, in part, on the make, model and year of the vehicle. For example, liability car insurance on a 2015 Honda Civic costs an average of $966 a year. The same coverage on a 2020 Honda Civic is $924 a year.
Liability-only car insurance by year
| Company | 2005 model rate | 2010 rate | 2015 rate | 2020 rate |
|---|---|---|---|---|
| Allstate | $1,363 | $1,499 | $1,548 | $1,108 |
| Geico | $1,132 | $1,137 | $1,087 | $1,004 |
| Illinois Farmers | $1,656 | $1,544 | $1,501 | $1,722 |
| Progressive | $812 | $828 | $840 | $791 |
| State Farm | $457 | $548 | $554 | $580 |
| Travelers | $578 | $575 | $574 | $570 |
| USAA* | $710 | $707 | $656 | $693 |
| Average | $958 | $977 | $966 | $924 |
*USAA is only available to current and former members of the military and their families.
Full-coverage car insurance on used cars often costs more than a liability-only policy, as full coverage also includes collision and comprehensive. If you financed a used car, your lender may require you to have full coverage for the duration of your loan agreement. After that, you can decide if full-coverage insurance still makes sense.
A new car starts depreciating the moment you drive it off the lot. Most used cars with even only a few years on them will have a low value when you buy them.
If the car is totaled in an accident, the payout is based on its depreciated value. What you get after your claim may be less than what you paid in premiums over time and the deductible you choose.
But if your car is older than five years or has more than 100,000 miles on it, full-coverage car insurance may not be worth it.
Full-coverage car insurance by year
| Company | 2005 model rate | 2010 rate | 2015 rate | 2020 rate |
|---|---|---|---|---|
| Allstate | $3,576 | $3,722 | $3,336 | $3,858 |
| GEICO | $2,061 | $2,333 | $2,557 | $3,098 |
| Illinois Farmers | $3,195 | $3,576 | $3,666 | $4,940 |
| Progressive | $1,547 | $1,789 | $1,875 | $2,148 |
| State Farm | $1,292 | $1,367 | $1,479 | $2,230 |
| Travelers | $1,088 | $1,171 | $1,293 | $1,503 |
| USAA* | $1,421 | $1,605 | $1,759 | $2,168 |
| Average | $2,026 | $2,223 | $2,281 | $2,849 |
The cost to insure a used car rose by 6.1% in 2022, according to the Insurance Information Institute. This increase is likely due to the higher risk of filing a claim as a car gets older.
While the age of a car is one factor car insurance companies look at when calculating a quote, one insurer may consider it more of a risk than another, causing them to charge you a higher rate. This is why you should compare car insurance quotes from several companies before you buy or renew a policy. It helps you get the best combo of cost and coverage for your needs.
Do I need insurance for a used car?
You need to have at least your state’s required amount of car insurance before buying a used car. Any car dealership will require proof of liability car insurance before letting you drive a car off their lot.
If you already have insurance for another car, most companies offer a grace period during which the used car can be temporarily covered under the policy. It’s best to contact your car insurance company as soon as possible after you buy the vehicle.
What insurance do I need before getting a used car?
When buying a used car, you want a policy with at least your state’s minimum amount of car insurance coverage. Keep in mind that your state’s required limits for car insurance will probably not be enough if you cause a major accident.
An extended hospital stay or court case after an at-fault accident can quickly go over most states’ minimum car insurance limits. Once you hit your policy limits, you have to pay any remaining costs out of your own pocket.
To avoid this, consider buying the following liability limits:
- Personal liability per person: $100,000
- Personal liability per accident: $300,000
- Property damage: $100,000
Should I get GAP insurance on a used car?
Some lenders require GAP insurance as part of their financing agreement, but it’s not as common as requiring full-coverage car insurance.
Guaranteed asset protection (GAP insurance) is coverage that pays the difference between what your used car is worth and how much you still owe on its loan.
Say you owe $10,000 on your car loan, but your car is only worth $5,000. GAP insurance covers the $5,000 difference. If you only have collision or comprehensive coverage, you’ll only be paid the car’s current value — which could be much less than what you owe on your loan.