Key Facts about Used Car Insurance
Key Facts about Used Car Insurance
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Key Facts about Used Car Insurance

Purchasing a pre-owned vehicle offers a fantastic opportunity for cost savings. However, these savings can swiftly diminish should you experience an accident without appropriate used car insurance coverage. This article Key Facts about Used Car Insurance.

To prevent the risk of being inadequately insured, or investing in needless insurance, it’s crucial to understand the mechanics of used car insurance, its associated expenses, and to identify the providers offering the most affordable options.

What Is Used Car Insurance?

Used car insurance pertains to an agreement between you and an automotive insurance company, delineating coverage for a vehicle that isn’t new. This policy outlines the conditions under which you would receive financial compensation in the event of a filed claim.

Should you fail to pay your car insurance premiums, your coverage will lapse, resulting in the denial of any claims submitted during the unpaid period.Key Facts about Used Car Insurance.

The optimal car insurance for a used vehicle encompasses a balance of suitable coverage tailored to your requirements, all within a budget that’s manageable.

How Much Is Insurance On A Used Car?

On average, insurance for a used car amounts to approximately $1,391 annually or $116 monthly, as indicated by Forbes Advisor’s examination of rates for popular 2013 model cars.

In our evaluation, the Honda CR-V, Ford F-150, and Chevrolet Silverado 1500 emerge as the most budget-friendly options to insure among the vehicles assessed. Conversely, the Nissan Altima, GMC Sierra 1500, and Honda Civic stand out as the costlier choices in terms of insurance coverage.

Vehicle 2013 model average car insurance cost per year
Honda CR-V $1,241
Ford F-150 $1,249
Chevrolet Silverado 1500 $1,270
Toyota RAV4 $1,315
Chevrolet Equinox $1,319
Ford Explorer $1,361
Jeep Grand Cherokee Laredo $1,366
Ram 1500 $1,386
Nissan Rogue $1,402
Honda Accord $1,429
Toyota Camry $1,437
Toyota Corolla $1,442
Honda Civic $1,483
GMC Sierra 1500 $1,531
Nissan Altima $1,643
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100 ($100,000 for injuries per person, $300,000 for injuries per accident, $100,000 for property damage), uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40.

Variations in Used Car Insurance Costs by State

When it comes to used car insurance expenses across states, Florida takes the lead with the highest average cost of auto insurance at $3,253 annually. Following closely are Louisiana at $3,042 annually and New Jersey at $2,426 annually.Key Facts about Used Car Insurance.

On the flip side, Vermont, Idaho, and New Hampshire emerge as the most cost-effective states for used car insurance coverage.

State Average annual used car insurance cost Average monthly used car insurance cost
Alabama $1,581 $132
Alaska $1,400 $117
Arizona $1,755 $146
Arkansas $1,658 $138
California $2,207 $184
Colorado $1,990 $166
Connecticut $1,968 $164
Delaware $2,279 $190
Florida $3,253 $271
Georgia $1,835 $153
Hawaii $1,136 $95
Idaho $936 $78
Illinois $1,515 $126
Indiana $1,171 $98
Iowa $1,089 $91
Kansas $1,571 $131
Kentucky $2,054 $171
Louisiana $3,042 $254
Maine $997 $83
Maryland $1,907 $159
Massachusetts $1,379 $115
Michigan $2,302 $192
Minnesota $1,473 $123
Mississippi $1,465 $122
Missouri $1,836 $153
Montana $1,549 $129
Nebraska $1,282 $107
Nevada $2,139 $178
New Hampshire $948 $79
New Jersey $2,426 $202
New Mexico $1,572 $131
New York $2,281 $190
North Dakota $1,168 $97
North Carolina $1,022 $85
Ohio $1,189 $99
Oklahoma $1,825 $152
Oregon $1,429 $119
Pennsylvania $1,712 $143
Rhode Island $1,578 $132
South Dakota $1,331 $111
South Carolina $1,894 $158
Tennessee $1,348 $112
Texas $1,897 $158
Utah $1,486 $124
Vermont $893 $74
Virginia $1,315 $110
Washington $1,465 $122
West Virginia $1,334 $111
Wisconsin $1,268 $106
Wyoming $1,194 $100
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100, uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40. Rates reflect averages for 30 vehicles in the 2013 model year.

Are Used Cars Cheaper To Insure?

On average, used cars exhibit a 37% reduction in insurance costs compared to new cars, according to Forbes Advisor’s comprehensive analysis of full coverage car insurance. The yearly average insurance expense for used cars is $1,391, signifying a $527 decrease in contrast to the average cost of $1,918 per year for new cars.

The affordability of insurance for used cars primarily stems from their diminished value, resulting in lower expenses for collision and comprehensive coverage. In the event of an accident that causes damage or results in the vehicle being totaled, the insurance company disburses a smaller amount for a used car as opposed to a brand-new one.

For those who opt for liability-only car insurance, the distinction in insurance costs between new and used vehicles might not be as substantial. Liability-only insurance covers the damages you inflict on others, thereby minimizing the significance of your vehicle’s age since there’s no reimbursement involved for your own vehicle.

Average Used Car Insurance vs. New Car Insurance Costs

Vehicle 2013 model average car insurance cost per year 2023 model average car insurance cost per year $ difference more for 2023 model % difference more for 2023 model
Chevrolet Equinox $1,319 $1,770 $451 33%
Chevrolet Silverado 1500 $1,270 $1,865 $595 45%
Ford Explorer $1,361 $1,885 $524 36%
Ford F-150 $1,249 $1,766 $517 41%
GMC Sierra 1500 $1,531 $2,128 $597 38%
Honda Accord $1,429 $1,981 $552 37%
Honda Civic $1,483 $1,980 $496 32%
Honda CR-V $1,241 $1,712 $471 37%
Jeep Grand Cherokee Laredo $1,366 $1,981 $615 43%
Nissan Altima $1,643 $2,168 $525 31%
Nissan Rogue $1,402 $1,857 $455 31%
Ram 1500 $1,386 $1,969 $584 40%
Toyota Camry $1,437 $1,962 $525 35%
Toyota Corolla $1,442 $2,015 $573 39%
Toyota RAV4 $1,315 $1,738 $423 31%
Averages $1,391 $1,918 $527 37%
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100, uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40. Rates reflect averages for 30 vehicles.

Securing Affordable Insurance for a Used Car

Here are some guidelines to help you attain cost-effective insurance for your used car: Key Facts about Used Car Insurance.

1. Evaluate Necessary Coverage:

Assess the types of coverage you truly require. If your vehicle is older and possesses diminished value, it might be wise to consider dropping collision or comprehensive coverage. The potential insurance payout in the event of a total loss might not justify the premiums you’re paying.

2. Elevate Your Deductible:

Increasing your deductible for comprehensive and collision coverage can lead to savings. A higher deductible translates to reduced insurer payouts for claims. According to Forbes Advisor’s analysis, you can save an average of 7% to 28% annually by opting for a higher deductible.

3. Explore Discounts:

Investigate available car insurance discounts to lower your expenses. For instance, you might qualify for a safe driver discount or a multi-policy discount if you hold multiple insurance policies with the same provider.

4. Specialty Insurance Consideration:

If you possess a classic or antique car, which often carries higher value, it’s prudent to explore specialized coverage options. Companies offering classic car insurance cater to the unique requirements of such vehicles.

5. Compare Quotes:

To secure the most budget-friendly coverage, engage in thorough comparison shopping. Obtain and compare car insurance quotes from several insurance companies. This approach enables you to pinpoint the most economical option tailored to your needs.

By adhering to these recommendations, you can increase the likelihood of obtaining cost-effective insurance coverage for your used car.

Most Affordable Used Car Insurance Providers

Among the companies scrutinized, Erie stands out as the most budget-friendly option for used car insurance, boasting rates that are $560 lower annually than the overall average of $1,391 per year. Following closely, Travelers offers used car insurance at a yearly cost that is $458 less than the average.

The assortment of the most economical used car insurance companies under review all present average annual rates that fall below $1,220.

Company Average cost per year for used car insurance
Erie $831
Travelers $933
Geico $1,200
USAA* $1,202
Progressive $1,219
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100, uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40. Rates reflect averages for 30 vehicles.
*USAA is open only to members of the military, veterans and their families.

Types of Used Car Insurance Coverage

The ideal car insurance for a used vehicle is contingent on your specific requirements and financial considerations. It’s important, however, to ensure you have at least the minimum car insurance mandated by your state to legally operate your vehicle. Additionally, there are optional coverage types available to furnish financial protection in cases of theft, damage, or total loss.

1. Liability Insurance:

Most states mandate liability car insurance as a minimum. This coverage pays for damages to others and their property if you’re found at fault in an accident.

2. Collision Insurance:

This coverage caters to repair or replacement costs for your vehicle following an accident, regardless of who is at fault. If your vehicle is financed, collision insurance is often required.

3. Comprehensive Insurance:

Comprehensive coverage addresses theft and damages unrelated to accidents, such as fire, vandalism, and weather-related incidents. If you reside in an area prone to these risks, comprehensive insurance might be advisable. It’s also often obligatory for financed vehicles.

4. Personal Injury Protection (PIP):

PIP covers medical expenses and lost wages for you and your passengers after an accident, regardless of fault. It’s mandatory in some states and optional in others.

5. Uninsured Motorist Coverage:

This coverage compensates for injuries caused by an uninsured driver. Its necessity varies by state.

6. Rental Reimbursement Insurance:

If your car is being repaired due to an insured accident, this coverage helps with the cost of a rental vehicle.

7. Roadside Assistance Insurance:

This coverage provides assistance if your car breaks down on the road.

Full Coverage Car Insurance for a Used Car

Full coverage car insurance amalgamates liability, collision, and comprehensive insurance, offering comprehensive protection for your vehicle.

If you finance or lease your car, full coverage car insurance is typically obligatory. Your decision regarding full coverage for a used car should primarily be guided by your car’s value and your financial situation.

For high-value used cars, full coverage car insurance is advisable. It covers accidents, theft, and non-collision damage like fire, hail, or flooding. Evaluate your car’s value using sources like Edmunds and weigh your financial capacity to repair or replace your car in case of damage.

In cases where your car’s value is relatively low, liability-only car insurance might suffice. This is because the maximum payout from comprehensive and collision insurance is the car’s value before damage, minus the deductible. For low-value used cars, insurance payouts are typically modest.

It’s always recommended to compare quotes from various insurance providers to find the best coverage and rates for your situation.

Gap Insurance for Used Cars

Gap insurance serves to bridge the gap between the amount you owe on your car loan or lease and the actual cash value of your vehicle in the event of theft or total loss due to a covered accident. This coverage can be particularly beneficial if you owe more on your used car than its current market value.

Used cars generally experience slower depreciation rates compared to new cars, potentially resulting in a less pronounced disparity between the loan balance and the car’s value. Gap insurance might not be necessary if your loan amount is lower than the actual cash value. Additionally, some insurers offer gap insurance exclusively for vehicles less than three years old.

Gap insurance can be advantageous in specific scenarios, such as:

1. Long Loan Terms:

Lengthy loan durations, such as 60 or 72 months, could lead to faster depreciation of your used car’s value than your ability to pay off the loan, potentially creating a gap.

2. Low Down Payment:

A minimal down payment on your used car might result in a substantial difference between the loan amount and the car’s value, warranting gap insurance.

3. Limited Savings:

Even if the gap is minor between your loan balance and the car’s value, gap insurance offers peace of mind if you’re unable to cover it. The cost is relatively reasonable, adding an average of $60 per year to your insurance expenses.

4. High Mileage:

If you drive extensively, the value of your car may decline faster due to mileage, making gap insurance more relevant.

5. High-Interest Loan:

A high-interest rate on your car loan could lead to a substantial gap between the loan amount and the car’s value, making gap insurance a logical choice.

Numerous car insurance companies provide gap insurance, including:

– Allstate
– American Family
– Auto-Owners
– Erie
– Nationwide
– Progressive
– Travelers

Obtaining Insurance When Purchasing a Used Car

When acquiring insurance for your used car, you have a few options:

1. Online Quotes:

Some car insurance company websites offer online quotes to help you compare rates.

2. Independent Agents:

Consulting an independent insurance agent can be helpful, as they can provide quotes from multiple insurers.

Before finalizing the purchase of your used car, it’s advisable to compare car insurance quotes for the vehicles you’re considering. You’ll need coverage in place before driving the car away. If you’re adding a new car to your existing household, make sure to contact your insurer to arrange coverage before the purchase.

If you already have car insurance and are replacing a vehicle, your current coverage might extend to the new used car for a limited period (usually around 30 days), giving you time to inform your insurer about the change.

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