Used Car Insurance: Everything You Need to Know

By Randy Luton | Last Updated: 04/14/2023

Purchasing a used car offers numerous advantages, including lower costs because the value of the car has already decreased and maybe greater space for price negotiation. Finding the best used car insurance coverage for your needs requires research, but purchasing a used car may save you money on both purchases and auto insurance.

When purchasing a used automobile, there are several measures you can take to be sure you receive the vehicle you want and the appropriate used car insurance coverage to keep it safe. When purchasing used car, auto insurance will be a significant deciding factor, and this article will cover all you need to know.

Types of insurance (coverage) needed for a used car

Used cars often just require the minimal level of insurance coverage required by the state, which frequently includes both property damage liability insurance and bodily injury liability insurance. Additionally, several states mandate uninsured motorist coverage, MedPay, and personal injury protection

The lender or licensor may demand extra forms of coverage, such as collision insurance and comprehensive coverage, for a second hand car that is financed.

How much used car insurance cost?

Insurance for used cars is not always less expensive than insurance for new cars. The average monthly premium for minimal coverage on a used automobile is $55 ($660 yearly).

The cost of insurance for used car depends on a variety of factors. The age of the car and the driver’s history are two more factors that insurance companies take into account differently. The easiest approach to finding rates for a used automobile that are reasonable is to receive quotations from several companies.

In general, used automobile insurance rates are less expensive, but this decrease may not always be the result of lower premiums. Instead, many individuals reduce their amount of coverage with older cars. New car owners are more likely to get full coverage and pay a higher insurance premium.

Which are the best car insurance companies for used car insurance?

Below is the list of top car insurance companies where you can buy car insurance policy for your used car:

State Farm$993
American Family$1129

Average used car insurance cost by state

As discussed, earlier insurance for buying a used car depends on a lot of factors and one of that factors is the location of the driver.

StateAverage Cost
California$61 per month
Texas$67 per month
Florida$109 per month
New York$141 per month
Pennsylvania$53 per month
Illinois$51 per month
Ohio$39 per month
Georgia$71 per month
North Carolina$49 per month
Michigan$111 per month

Gap Insurance for Used Car Purchase

Since new cars lose value the most quickly, purchasing gap insurance is usually advised, but you may also get it for used cars. Keep in mind that some insurers won’t offer gap insurance for second hand car unless they’re under three years old. If you owe more on your automobile than it is worth, gap insurance on a 2nd hand car can offer peace of mind for a very low price.

The primary aspect to take into account is the difference between the amount you owe on the automobile and its value after depreciation. In the event that your car is ever stolen or damaged, gap insurance may be able to save you from significant financial hardship if you owe more than the vehicle’s ACV.

How to get insurance before buying a used car?

The easiest approach to buying coverage for your used car is online, where the majority of major insurance providers make it simple to do so. If you don’t already have auto insurance, perform these steps:

  1. Select the car of your choice: Consider your possibilities for the desired car. Knowing specifics about the car you wish to purchase will help you compare insurance rates.
  2. Obtain car details: Once you’ve made your decision, you should contact the dealer to confirm your intention to purchase the vehicle and obtain information such as the make, model, VIN, and vehicle history report, which will influence your insurance premium.
  3. Choose the type of insurance you want: Depending on what type of vehicle you intend to purchase, used car insurance may be less expensive than new car insurance. In addition to the minimal liability needed by your state, you must obtain collision and comprehensive coverage if you’re financing the automobile. Do not forget to get at least three quotations from different auto insurance providers.
  4. Set a deductible: If you were in a vehicle accident, the deductible is the amount you would be responsible for paying before the insurance company began to compensate you. A $500 or $1,000 deductible is normal for auto insurance. The cost of insurance for your used automobile will decrease as the deductible increases.
  5. Purchase the policy. You may buy a policy using the online checkout when you submit the application and see your final pricing. You can safely leave with your car after delivering the insurance binder and evidence of coverage to the dealership.

Frequently Asked Questions on Used Car Insurance

Do I need proof of insurance when buying a used car?

Yes. Regardless of whether your automobile is new or old, the dealer will want evidence of insurance before you can lawfully take it home. Most private sellers won’t request to view your insurance information when you buy a car from them, but you still need insurance on the vehicle in order to drive it lawfully.

Do I need a separate policy for my used car if I already have insurance?

Yes, even during the two weeks when you might not have transferred the current insurance of the used automobile, the third-party coverage is transferred automatically and is in effect. The only time it applies after that is when you buy or renew fresh second hand car insurance.

Which is less expensive to insure, new or used cars?

If you have comprehensive or collision insurance, a used automobile may usually be less expensive to insure than a new one. Used cars might cost less to fix or replace since they are often worth less than new cars.

Do old and new cars have separate insurance policies?

The majority of the time, insurance for new and used cars is the same. Standard insurance policies like liability, uninsured motorist, and personal injury protection (PIP) are often subject to the same considerations. But if the value of your used automobile isn’t so high and you can afford to pay to have it fixed or replaced, you might not need comprehensive and collision insurance.

Does a used car require full coverage?

A second-hand car does not require full coverage insurance unless it is financed or leased. Despite the fact that no state mandates full coverage insurance, it is nevertheless advised for used cars if you cannot afford to replace the vehicle in the case of an accident or other unforeseen circumstances.

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Editorial Guidelines: The above is meant as general information to help you understand the different aspects of auto insurance. This information does not refer to any specific auto insurance policy. Coverages and other features vary between insurers, vary by state, and are not available in all states. References to costs of coverages/repair, average or typical premiums, amounts of losses, deductibles, etc., are indicative and may not apply to your situation. We encourage you to speak to our insurance representative and to read your policy contract to fully understand your coverages.

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Randy Luton is the Founder and CEO of RateForce. He is passionate about InsurTech services and has in-depth knowledge about the auto insurance sector of the USA.