What is Used Car Insurance?
Used car insurance is auto insurance coverage for vehicles that are not purchased new from the manufacturer. In other words, it is normal car insurance but for a used car, which can be more difficult to insure than a brand-new car but will likely be less expensive to cover.
How Much is Insurance for a Used Car?
Car insurance for a used car costs an average of $60 per month ($716 annually) for minimum coverage. Having a minimum coverage policy may make the most sense, especially for older used cars. Older used cars aren’t worth as much as new cars, so the payout from a full coverage policy if the vehicle is totaled may not be worth the added cost in premiums.
Used Car Insurance Cost by State
|California||$60 per month|
|Texas||$64 per month|
|Florida||$103 per month|
|New York||$143 per month|
|Pennsylvania||$51 per month|
|Illinois||$49 per month|
|Ohio||$33 per month|
|Georgia||$73 per month|
|North Carolina||$43 per month|
|Michigan||$108 per month|
Note: Premiums are representative of a 45-year-old good driver with minimum coverage; individual premiums will vary.
See a full list of the average cost of car insurance by state.
Is Used Car Insurance Cheaper?
Used car insurance is typically cheaper than coverage for a brand-new car, but this is mostly because many people choose to carry lower levels of insurance coverage on used cars. The cheapest type of policy for a used car is a liability-only, or minimum coverage, policy. You can check out the cheapest companies for liability-only car insurance below.
Cheapest Used Car Insurance Companies
Types of Used Car Insurance Coverage
Used cars typically only need the state-mandated minimum amount of coverage, which often includes bodily injury liability insurance and property damage liability insurance. Some states also require personal injury protection, MedPay, or uninsured motorist coverage.
For a used car that is financed, the lender or lessor may require additional types of coverage such as collision insurance and comprehensive coverage.
Learn more about the types of car insurance and how much car insurance you need.
Do You Need Full Coverage on a Used Car?
You likely do not need full coverage car insurance on a used vehicle unless the vehicle is still worth a lot of money, or it is financed. Financed vehicles may be required to have full coverage insurance, even if they’re used.
In general, if the cost of your full coverage policy is equal to or greater than 10% of your vehicle’s value, it is probably a good idea to drop the extra coverage.
Learn more about when you need full coverage on a used car.
Buying a Used Car Without Insurance
You may be able to buy a used car without insurance, especially from a private seller. You cannot legally drive the car home without insurance, though, since driving without insurance or some proof of financial responsibility is illegal.
If you have an existing car insurance policy for a different vehicle, you may have a grace period, in which you will be covered by your insurance even if you haven’t told your insurer about your new car. If you do not have an existing policy, though, you cannot drive the car home legally without getting coverage.
Learn more about insurance requirements when buying a used car.
How Long You Have to Get Insurance After Buying a Used Car
You need some sort of insurance to be able to drive a used car home legally. Many insurers offer grace periods of up to 30 days for adding a car to an existing policy, in which case you’ll be covered driving the car home or to your DMV even if it is not explicitly listed on the policy.
If you are buying a used car from a dealership and you do not have an existing insurance policy, you may be able to purchase coverage through an insurance broker who works with the dealership.
Learn more about how long you have to get insurance after buying a used car.
Used Car Insurance Grace Period
When buying a used car, your insurer may have a grace period of up to 30 days, wherein you are covered by your existing insurance policy before adding the new vehicle. Grace periods for adding a new, or just new-to-you, car to your insurance policy vary by insurer.
For example, Geico and Progressive both offer grace periods of 30 days, while Nationwide’s is only 10 days. It is a good idea to check with your insurance company before buying a used car, so you know exactly what your insurer allows.
Learn more about used car insurance grace periods.
Gap Insurance on a Used Car
Gap insurance for used cars protects you if you owe more on a loan or lease than the car is actually worth. If your used car is only a few years old, you may qualify for gap insurance from some companies, like AAA, Allstate, or American Family.
If your car does not qualify for gap coverage, there are some alternative options available. Some insurance companies offer a type of coverage called loan/lease payoff coverage, which is usually easier to qualify for than gap insurance. Loan/lease payoff will only cover up to 25% of your vehicle’s value if it is totaled and you owe more than the car was worth.
Learn more about gap insurance for used cars.
Car Repair Insurance for Used Cars
Car repair insurance for used cars is usually not worth the cost and may not even be available. Car repair insurance, mechanical breakdown insurance, and extended warranties are often only available for newer vehicles, so getting coverage depends on your vehicle’s age and mileage.
Even when it is available, car repair insurance coverage only lasts for a certain number of years or miles, and what is and is not covered can be confusing. This could lead to denied claims down the road and unexpected out-of-pocket costs for you. A better option is to put the money you would spend on the coverage toward an emergency fund, so you’ll have the money available if an emergency happens.
Learn more about car repair insurance.
Used Car Insurance Tips
1. Compare quotes regularly. Since each insurance company determines their rates differently, comparing quotes from several insurers is the best way to make sure you are getting the best deal available.
2. Consider what types of coverage you need. If you have a used car that is still worth quite a bit, and you know you wouldn’t be able to afford to replace it on your own if it were totaled in an accident, getting full coverage may make sense. However, used cars that are not worth much, or that you could afford to replace easily, typically aren’t worth the extra monthly cost of a full coverage policy.
3. Take advantage of discounts. Car insurance companies often offer discounts for things like being a safe driver or paying your policy in full. These discounts can add up to a lot of savings each month, so don’t be afraid to ask what discounts you may qualify for while shopping for coverage.
4. Look into specialty insurance. If your used car is particularly old or has some sort of collector value, you may be eligible for classic car insurance instead. While there are more restrictions on how you can use the car, classic car insurance is typically much cheaper than normal policies.