Used Car Insurance: Everything You Need to Know

Used Car Insurance: Everything You Need to Know

When shopping for used car insurance, it's important you get a plan that works for you and the specific vehicle you own.

All states have minimum coverage requirements you have to meet, so basic liability insurance is a given. But is it a good idea to get more comprehensive coverage on a used car?

Quick Links:

What type of insurance is best for a used car?

How much does used car insurance cost?

Do I need insurance before I buy a used car?

Where can I buy a used vehicle from a private party?

When considering used vehicle insurance above and beyond the minimum required by law, car owners are faced with so many additional insurance options. These include:

Let’s dive into used car insurance basics.

What Kind of Insurance Should You Get for a Used Car?

Used cars, just like new cars, have insurance minimums that are required by state law. Old vehicles might be the cheapest cars to insure, but that doesn't mean you can go without insuring them at all.

href="" class="text-[#00b3de] hover:underline">Car insurance companies can have significant variance in rates, so always do your research and compare quotes. An insurance company might have competitive prices for one type of coverage—or one type of vehicle, or one category of driver—but not so much for other profiles. State Farm, for example, may offer the best rates for one type of car, but be beaten by Allstate or Progressive for a different type of car.

When buying a used car to save money, think beyond the price of the car. Auto insurance rates vary based on make, model, and year of the car you want to buy, as well as whether you want comprehensive and collision coverages. Factor all of these variables in when considering which used car to buy.

Liability Insurance

Liability vehicle insurance provides protection against claims resulting from bodily injuries and damage to other people or property, and is required in most US states. When considering whether to stick with liability coverage car insurance or something more comprehensive, a major factor is the market value of the vehicle.

Choosing a cheap car insurance coverage might save money in the short term, but that won't really protect your investment if your vehicle is worth a significant amount and it gets totaled. In such a scenario, you’ll wish you had full-coverage insurance.

Gap Insurance

Gap insurance is optional vehicle insurance coverage that helps you pay your car loan if your car is stolen or totaled and you owe more for the vehicle than it is currently worth.

This insurance is also called loan or lease gap coverage and is more common for new vehicles; used car gap insurance is more rare.

Use our auto loan calculator to determine how much your vehicle loan will cost you per month.

Mechanical Breakdown Insurance

Mechanical breakdown insurance, also known as car repair insurance, is an insurance add-on that provides an extra layer of protection in case of a mechanical breakdown. This insurance covers parts and labor involved in repairing a malfunction or a breakdown of your vehicle.

Collision Insurance

Collision insurance is an auto insurance add-on that reimburses for damage to a vehicle that is the fault of the insured driver. For example, if a vehicle gets damaged from a collision with an object or as a result of flipping over, and no other vehicles are involved in the collision, this insurance will cover that cost.

Comprehensive Insurance

A comprehensive insurance add-on protects against damage that is not caused by a collision and is outside of the owner’s control. For example, a comprehensive insurance package will reimburse you for damage caused by vandalism, theft, fire, and natural disasters.

Personal Injury Protection Insurance

Personal injury protection, otherwise known as no-fault insurance, covers medical expenses of the driver and passengers in case of personal injury—regardless of who is at fault. While this type of insurance is not mandatory in most US states, some states do require a minimum amount of personal injury protection coverage.


How Much Does Used Car Insurance Cost?

href="" class="text-[#00b3de] hover:underline">Car insurance can be as low as $250 per year, or much as $10,000 annually. Your average annual insurance price will vary based on your car’s model and make, your age, your driving record, and the minimum coverage required by your state.

If you're trying to decide which used car to buy and are considering several vehicles, it's worthwhile to research the average cost of car insurance for each of them to find out which used car insurance option is going to be the best. Insurance rates from one vehicle to the next may sway your decision of which to buy.

State Requirements for Used Car Insurance

State insurance requirements are quite similar, with minor differences from one state to the next—usually in the dollar amounts of coverage required. For example, one state may require a $10,000 minimum in bodily injury insurance, while another state may require a $15,000 minimum for the same coverage. Following your state's requirements is mandatory to get your car registered and legal to drive.

While you can insure a car for more than what the state requires, you can only do so up to certain limits. For example, you probably can’t get a policy for $1 million in bodily injury, since most car insurance policies don't go that high. There can be a steep price difference between the lowest and highest coverage options, so do some research and get the in-between amount that’s right for you.

Is it Cheaper to Insure a New or a Used Car?

Used cars cost less than new to insure as a general rule, but there are exceptions. The age of the car influences car insurance quotes, but it's not the only factor.

Cost of Parts a Factor

Some car models and makes are more expensive than others. One reason for the rate discrepancy involves parts costing far more for some makes and models than for others.

For example, buying a Ford is generally going to incur a lower car insurance cost than buying a BMW, all other things being equal. That’s because parts for BMW (and other luxury brands) cost a premium. So, if you choose a luxury car, make sure you're budgeting for higher car insurance rates.

A Word on Classic Car Insurance

Insuring an older used car is a lot different from insuring a classic car or antique car. Classic cars can be worth a lot, and they can't easily be repaired or replaced. As a result, classic car insurance could be high—even though the vehicle is old.

Do I Get a Car Insurance Before I Buy a Used Car?

In most cases, href="" class="text-[#00b3de] hover:underline">you should get insurance before you buy a vehicle , as you can’t legally drive an uninsured car. Even if you’re href="/buy" class="text-[#00b3de] hover:underline">shopping used cars for sale, it’s smart to get an insurance quote as soon as possible. That way, you’ll have an estimate of how much you are expected to pay for car insurance for the particular vehicle model and make.

How to Get Insurance Before Buying a Used Car from a Private Seller

The process of getting vehicle insurance is quite straightforward. Simply call a href="" class="text-[#00b3de] hover:underline">vehicle insurance provider of your choice, notify them that you plan on buying a used vehicle, and provide them with the vehicle identification number (VIN) of said vehicle.

You can choose a start date a few days before you plan to purchase your vehicle and ask the insurance provider to confirm that your coverage has started via email, text message, or a phone call.

How Long Do You Have to Get Insurance After Buying a Used Car?

It’s best to get insurance before you buy a vehicle. However, if you already own an insured vehicle and are buying another car, some companies may offer a short grace period in which your new-to-you car is covered.

Different insurance companies have different grace periods when it comes to how long you have to get insurance after buying a used car. This period typically lasts between 7 and 30 days.

During that time, you will have to notify your insurance company that you have bought a vehicle and discuss your insurance options.

Not all insurance companies offer grace periods, so be sure to talk to your insurance agent before buying a car so you’ll be in the clear.

PrivateAuto: a One Stop Shop for All Your Used Vehicle Needs

Now that you know how to find the right used car insurance policy, how will you go about finding the right used car to fit your budget and lifestyle? If you're looking for a reliable used car, you can find the perfect vehicle to fit your needs and your budget on PrivateAuto.

We make the process of buying and selling used vehicles easy, quick, and secure. Sellers can set a price they’re happy with and communicate with potential buyers through our messaging integration without giving out personal information.

Buyers can browse vehicle ads by vetted sellers, contact sellers, schedule test drives, and send instantaneous payments of up to $1M. Everything is streamlined and private.

Our payment gateway, PrivateAuto Pay, allows instant payments 24/7/365. Buyers can pay sellers at the test drive and close the deal.

Sellers can receive funds immediately into their PrivateAuto Pay account, and can move the money to their bank (savings account  or checking account) via a balance transfer. It’s awesome.

Experience the PrivateAuto Advantage

Avoid scams, keep personal information private, and guarantee funds with PrivateAuto. Fast, convenient car transactions. Get started today.

Avoid scams, keep personal information private, and guarantee funds with PrivateAuto. Fast, convenient car transactions. Get started today.

FAQ on Used Car Insurance

What are the 3 types of car insurance?

The three main types of car insurance are liability coverage, collision coverage, and comprehensive coverage. These coverage types vary in price, with the liability coverage being the cheapest car insurance option.

Can you drive a second car without insurance?

No, you can’t drive a second vehicle without insurance, even if your first vehicle is insured. Vehicle insurance follows the car, not the driver. You’ll need to buy used car insurance for every vehicle.

Can I drive a car if I’m not the registered owner?

Yes, you can take out insurance and drive a vehicle you’re not the registered keeper of. However, many insurance companies require a defined relationship with the vehicle owner in order to take out a separate policy on a vehicle.

Should I get cheap car insurance?

The cheapest used car insurance may not always be the best for you. Read the coverages carefully to know what you’re getting. You can also look for car insurance discounts or ask your insurance company for bundled insurance discounts (for example, if you have home insurance and car insurance at the same company).

For example, the cost of used car insurance should be less for an American family that’s paying for renters insurance, homeowners insurance, health insurance, or life insurance—compared to a first time customer.

What is uninsured motorist coverage?

Uninsured motorist coverage is a vehicle insurance add-on that protects you if you get hit by a driver who does not have auto insurance. Another add-on, called underinsured motorist coverage, covers your expenses if the driver that hit you does not have enough coverage to pay for the damages.

Can I get vehicle insurance on a salvage title?

No, you can’t get vehicle insurance on a salvage title. A vehicle with a salvage title is considered a total loss and can’t be driven on public roads, and thus can’t be insured. Once you repair the vehicle and upgrade the car title to “rebuilt” status, you will be able to insure your car. You’ll then be able to show proof of insurance to your state’s DMV or equivalent organization to get the car registered and licensed.

How do insurers calculate insurance rates?

When you buy insurance, it can be confusing to figure out what accounts for the variation between one policy and another.

Insurers calculate rates based on coverage, but also based on the year, make, and model of the car: some cars are more expensive to insure. Rates also vary based on personal factors such as your driving record, credit score, and marital status. Asking your insurance agent for a couple of different policies and their associated costs can help you compare car insurance options available to you.

Usually, you’ll want to get a package that includes comprehensive and collision insurance if you’re buying an expensive vehicle. Liability-only car insurance may suffice for a lower-value car.

If you are a safe driver with an excellent credit score, you’ll get a better deal. Meanwhile, teen drivers, those with a speeding ticket, and those with a bad or fair credit score are likely to pay more.

What’s the ideal level of coverage for used vehicles?

While all states require insurance for used cars, having the right amount of it can equal peace of mind you won't be able to get otherwise. One major factor to consider: your car’s value.

There's little need to purchase the maximum level of comprehensive coverage insurance for a 15-year-old "clunker," but you probably don't want to go without collision and comprehensive insurance on a car that's only a couple of years old, because of its high replacement value.

Of course, the only person who can make the choice of what level of used car insurance to buy is you. Still, the more information you have about car insurance—and the more you know about the vehicle you're buying—the easier it will be for you to make the right choice when you buy used car insurance.

Are there auto loans for bad credit?

Some companies do offer car loans for bad credit scores, but the interest rates associated with these are often exorbitantly high. If you have bad credit, consider looking into the following options before signing onto a high-interest loan.

  • Getting a personal loan from a friend or family member
  • Getting a home equity loan or line of credit and using that to purchase a vehicle
  • Waiting to buy a car and paying down credit card debt or student loans in the meantime
  • Consider debt consolidation to bring down the average interest rate you are paying