Whether you’re buying a new or used car, you’ll need auto insurance before hitting the road. Insurance premiums depend on several factors, including your age, location, driving record, and the car itself. One common question is, is insurance cheaper for used vehicles? In many cases, it is, but there are exceptions. Let’s explore why insuring a used car is often cheaper and when that might not be the case.

New vs. Used Car Insurance: What’s the Difference?

Auto insurance companies don’t differentiate between “new car insurance” and “used car insurance.” Regardless of your vehicle’s age, you can access the same coverage types, such as liability, comprehensive, and collision insurance. However, the age and depreciation of your vehicle influence whether you need specific coverages and how much they will cost.

For example, comprehensive and collision coverage may not be necessary for an older vehicle, and even if you decide to carry them, the cost is typically lower for used cars. However, liability and personal injury protection (PIP) rates won’t be as affected by your car’s age.

Is It Cheaper to Insure a Used Vehicle?

In most cases, it’s cheaper to insure a used vehicle. Several factors contribute to this:

• Lower replacement costs: A used car’s value is typically lower than a new car’s, which means the maximum payout your insurer would have to make is reduced. This leads to lower premiums.
• Reduced repair costs: Parts and repairs are often more affordable for older vehicles, which reduces the insurer’s potential expenses and helps keep premiums low.
• Dropping coverage: If you own your used car outright, you can opt out of comprehensive and collision coverage, which significantly lowers your premiums.

However, it’s important to remember that newer vehicles often come with advanced technology and safety features that may increase their repair costs. On the other hand, some safety features in newer cars can help you qualify for discounts, partially offsetting higher premiums.

When Is Insurance Not Cheaper for Used Cars?

Although insurance for used cars is typically cheaper, this is not always the case. Other factors, such as the vehicle’s make, model, and value, can play a significant role in determining your insurance premium.

For instance, insuring a luxury, sports, or classic vehicle can be more expensive than insuring a brand-new car. High-end cars, even if older, may require expensive repairs or replacements, driving up the cost of insurance.

For example, according to Insure.com, insuring a brand-new 2024 Honda HR-V costs around $1,673 per year, while a used 2015 Porsche 918 Spyder could cost over $5,000 per year. In these cases, it’s the value and repair costs of the car, not the age, that determine the higher premiums.

Coverage Levels for New vs. Used Cars

The type of coverage you need will vary depending on whether your car is new or used, as well as whether you own it outright or are financing it.

• Used cars: If you’ve paid off your used car, you may only need to carry the minimum state-required insurance. In this case, liability insurance may be enough to meet your needs.
• New cars: If you’re financing or leasing a new car, you’ll likely need full coverage, including comprehensive and collision insurance, and possibly gap insurance.

Comprehensive and Collision Insurance

Comprehensive insurance covers damage to your vehicle from non-driving events like theft, vandalism, or natural disasters. Collision insurance, on the other hand, covers damage caused by accidents. These two coverages often come bundled together to provide full protection for your vehicle.

For used cars, comprehensive and collision insurance may not be necessary if the car’s value is low. If your car is worth only a few thousand dollars, it might make more financial sense to skip these coverages, especially if your deductible is close to the car’s value.

Gap Insurance for New Cars

If you’re financing a new car, gap insurance may be required. This coverage protects you if your car is totaled or stolen and you owe more on the loan than the car is worth. Without gap insurance, you’d be responsible for paying the difference between the loan amount and the car’s current value.

Even for some used cars, gap insurance can be useful if you owe more on the loan than the car’s actual value.

Discounts for New and Used Cars

Many auto insurance companies offer discounts that apply to both new and used cars. However, newer cars often come equipped with modern safety features, which can result in additional savings.

• Anti-lock brakes and anti-theft devices: These features, common in many vehicles, can earn you discounts of 10% or more on your comprehensive and collision insurance.
• Passive restraint systems: If your car is equipped with airbags or seat belts, you could qualify for a discount of up to 25% on your PIP or medical payments coverage.

Choosing the Right Car Insurance

When shopping for car insurance, it’s essential to find the right balance between affordable premiums and the coverage that fits your needs. While insurance is often cheaper for used vehicles, several other factors, like the car’s make and model, your location, and your driving history, also affect premiums.

Here are some tips to help you find the best insurance for your vehicle:

• Compare quotes: Shopping around and comparing quotes from multiple insurers can help you find the best rates. Different companies use different criteria to calculate premiums, so it’s worth getting several quotes.
• Look for discounts: Ask about any discounts you may qualify for. Discounts can apply to new or used cars based on features like safety technology, your driving history, or even your profession.
• Evaluate your coverage needs: Consider what coverage you really need. If your car is fully paid off and not worth much, skipping comprehensive and collision insurance could save you money.

The Bottom Line

So, is insurance cheaper for used vehicles? In most cases, yes, because used cars are less expensive to repair and replace. However, other factors like your car’s make, model, and safety features play a crucial role in determining insurance premiums. Be sure to compare quotes, consider your coverage needs, and ask about discounts to find the best insurance for your situation.

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