Getting the Cheapest Used Car Insurance
Getting the lowest-priced used car insurance often comes down to picking the correct coverage.
Full-coverage car insurance may not have enough of a return on investment for a used vehicle, depending on the age of the car. And if you financed your car, GAP insurance may be a good buy.
Either way, you’ll need to act quickly in getting a new policy, since the grace period on your current insurance policy (if you have one) might not last long.
How much is used car insurance?
The average annual used car insurance cost is $1,976 for full coverage and $773 for minimum coverage.
According to iii.org, the cost to insure a used car rose 12.7% in 2022. A large part of the price increase for used cars is due to the higher risk of filing a claim as a car gets older.
While the age of a car is a factor that car insurance companies will use when calculating a quote, one insurer may consider it a higher risk factor than another, resulting in them charging you a higher rate.
To avoid paying more than you need to, compare car insurance quotes from several providers.
Do I need insurance for a used car?
A used car dealership is going to require seeing proof of auto insurance before letting you drive a car off their lot. You’ll need to carry at least your state’s minimum coverage requirements.
If you already have insurance for another car, most providers 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’ll want a policy with at least your state’s minimum coverage in place. State-mandated liability limits are rarely updated.
An extended hospital stay or court case after an at-fault accident can exceed most states’ limits quickly. Once your policy limits are hit, you’re paying any remaining damages out of pocket.
In order to avoid expensive damage costs, consider buying the following liability limits:
- Personal liability per person: $100,000
- Personal liability per accident: $300,000
- Property damage: $100,000
After that, consider if full-coverage car insurance is a good idea.
A new car starts depreciating the moment you drive it off the lot. A used car with even only a few years on it will have a low value when you buy it.
If the car is totaled in a collision, 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.
If you’ve financed or leased a used car, your lender will probably require you to carry full-coverage car insurance. Once the car is paid off, however, you can drop the full coverage if you choose to.
Do I need GAP insurance on a used car?
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 and 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 out what the car is valued at — which could be much less than what you owe on your loan.
Some lenders require GAP insurance as part of their financing agreement, but it’s not as common as requiring full-coverage car insurance.
We looked at thousands of car insurance quotes from across the country for a 30-year-old man with good credit and no tickets, accidents or convictions for driving under influence, using a 2015 Honda Civic EX.
The following coverage limits were used:
- Bodily injury liability: 50,000 per person, $100,000 per accident
- Property damage liability: $25,000
- Uninsured motorist: $50,000 per person, $100,000 per accident, where required by law
- Personal injury protection: minimum limits, where required by law
- Collision: $500 deductible
- Comprehensive $500 deductible