How does insurance work when buying a used car?
Insurance generally works the same for a used car as for a new car. Car insurance for a used car is often a little cheaper than insurance for a new car since prices are partially based on the model year.
To drive any car off the lot, you’ll need an insurance policy in place. Once you start looking at used cars and zero in on one you’re thinking of buying, it’s a good idea to look at car insurance quotes. This way you’ll have an idea of the coverage you'll need and what the costs might be before you buy your car.
You can enlist the help of your current insurance company and have the used car added to your current policy. You can also use an online insurance calculator to look at pricing from other carriers and buy policies online.
You’ll need to carry at least the state minimum liability coverage and any other coverage required by law on your vehicle. If you’re taking out a loan on a used car, there will be certain insurance requirements the lender will have. You’ll most likely need to purchase full coverage, which includes comprehensive and collision.
Before you drive away in a newly purchased car, whether used or new, you must have insurance in place.
How much is full coverage insurance on a used car?
Full coverage car insurance on a used car is more expensive than just buying the state minimum liability, but may still be cheaper than what you would pay on a new car.
Full coverage is a combination of liability plus comprehensive and collision, along with any other coverages required by law in your state, which means your vehicle is protected in case of an accident or other damage to the vehicle, including theft.
The cost of full coverage will depend on your personal driving record and the make, model, and age of the vehicle. The newer the vehicle and the more bells and whistles, the higher the cost.
How to get insurance before buying a used car
There are a few different ways to go about getting insurance for your used car.
- Contact your current insurance agent or company for help. If you already have a car insurance policy, call your current insurance company and let the representative know you’re looking to buy a used car. If you have your eye on a certain make and model, they can prepare a quote for you based on that car. They will want to know if you plan on financing the vehicle or paying cash.
- Go online to request quotes from car insurance companies. You’ll need a few key pieces of information:
- Make and model of the car or VIN if you have it
- Your ZIP code
- Required coverage levels
- Driver information
- Utilize the car dealership’s insurance department to help secure a policy. Many dealerships have an insurance department on site. They can help you with specific coverage needs and work with their finance department to bind coverage before you are ready to drive the car off the lot.
Remember, you can’t drive the car off the lot until you have insurance in place and ready to go.
Factors that affect the cost of full coverage car insurance
Factors that affect the cost of full coverage are:
- Your age
- Driving record
- Make and model of the car
- Your location
- Your claims history
- Your credit history
- Your coverage limits
- Whether or not you have a loan and what the lender requires
Insurance companies consider where you live because they consider the risk factors for that area—the weather, crime and theft, and the number of claims. If severe weather is common, this translates to more storm damage claims and, therefore, higher than average rates. The same goes for high-crime areas. Since you can file a claim for stolen or vandalized vehicles, insurance companies consider crime trends when calculating rates.
Age is a major factor in car insurance. Certain age groups are considered riskier than others. Your driving record is also a key component. Multiple moving violations mean higher rates.
Sports cars, vehicles with high-tech features and cars with high price tags are more expensive to insure.
Used car insurance FAQ
Are used cars cheaper to insure?
In general, used cars are cheaper to insure. Newer makes and models with more updated features are more expensive to repair and replace, meaning higher rates. Some older models may be more expensive to insure, however, depending on the make and model.
How long do you have to get insurance after buying a used car?
You need car insurance to drive your used car off the lot. You can have the insurance ready to go and then the actual vehicle gets added once you purchase it. If you already have an insurance policy, your carrier will automatically cover you until you can call in with the information. The length of this grace period varies, so call as soon as possible.
Do I need insurance before I buy a used car?
You can purchase insurance for your used car ahead of time or the day of, as long as you have insurance in place to drive it off the lot.
What insurance should I get for an old car?
You will need at least the state minimum for your used car. If you are financing the vehicle, the lender will almost always require comprehensive and collision in addition to the state minimum.
Can I buy a used car without insurance?
You must have insurance to drive any car, new or used. So while you can purchase a car without insurance, you won’t be allowed to drive it until it’s insured.
Helpful auto insurance tools and calculators
