Buy Car Insurance for a Used Car

Purchasing insurance for a used car generally follows the same process as buying it for a new car. However, there are a few differences when it comes to the rates you will pay. Although you will likely have lower insurance payments because used cars are less valuable, you are still required to purchase liability coverage as required by your state and automotive loan lender, if you have one. Additionally, the car's individual history and the model's reputation may have additional impact on your rates. Be sure to have these considerations in mind when calling to purchase insurance for your used car.

Steps

Estimating the Cost of Insuring Your Car

1. Determine your contractual responsibility to carry insurance. If you own your vehicle, outright, you can choose whether to simply buy liability insurance, or to buy optional expanded coverage to protect your auto. However, if you are leasing a vehicle, or owe money to a bank or dealership for your car, you likely are contractually required by your loan or lease to purchase a certain amount of additional coverage. If you don't own your car outright, contact your lender to determine what coverage you are required to buy.
2. Choose your liability coverage. Liability insurance pays for any damage you cause to other people or their cars while you are driving. All drivers are required to carry liability insurance by law. This cost will be identical in buying insurance for a used car as it would for buying insurance on a new car. In most states, you are required to have insurance of at least $15,000 in liability coverage.
   • Your insurance policy will have a liability limit, which is the maximum amount the insurance will pay in case of an accident. If you have valuable assets, such as property or savings account, you may want to protect these assets in case of accident. For more information, see Determine Car Insurance Liability Limits.
   • The liability limit on the policy does not limit the amount of damages that may be rewarded in the event of a lawsuit. As a consequence, many people carry excess liability insurance for extra protection.
3. Decide whether to buy other coverages. Comprehensive insurance pays for damages not caused by automotive accidents, including damage caused by natural events and animals. Additionally, collision insurance is another optional coverage that pays for damage on your car from striking another vehicle or object.
   • When deciding whether to opt for comprehensive or collision coverage, you should consider the value of your car. Your insurance company will pay at most the fair value of your car before any damage. If, for example, you drive a dated VW Jetta worth only $1,500, it likely isn't cost effective to pay each month for comprehensive coverage in case of an accident. A good rule is to drop these coverages if they cost more than 10% of the value of your car each year.
   • The costs of these coverages will vary with your chosen deductible (the amount you are responsible to pay before the insurance covers you). Generally this is between $500 and $2,000, but you can also choose to have a $0 deductible. The lower your deductible the higher your insurance payments will be, but the less you will need to pay out of pocket in case of an accident.
4. Research other factors that may increase your insurance costs. Insurance costs are tabulated by insurances providers using complicated models that predict the risks associated with certain owners and cars. Several variables beyond the price of the car can have an effect on your rates, including:
   • If your car includes the words "turbo" or "supercharged" in the name, or is a highly powerful or four-wheel drive vehicle, your rates will experience a significant boost.
   • If your car has ever been in a serious accident and been rebuilt or had any other serious modifications or repairs made, your rates may be significantly higher. Check the vehicle's detailed history report to see if this is the case.
   • If your car is commonly stolen, this may also result in higher rates. And don't think that your car is not commonly stolen just because it is an old model; the National Insurance Crime Bureau (NICB) reports that 7 of the top 10 most commonly stolen vehicles in 2012 were models dating from 1991 to 1999. Check out the NCIB's Hot Wheels campaign to learn more about which cars are commonly stolen.

Getting a Good Auto Insurance Rate

1. Evaluate potential insurance providers. After estimating your insurance requirements and additional costs, it's time to shop around for the best rate. Start by locating insurance providers in your area or online and evaluating their reliability. Reputable companies will have a high rating from the A.M. Best Company, which rates insurers by financial stability (their ability to pay your claims). Ratings for most insurers can be located at ambest.com/consumers.
2. Get insurance quotes. Start by checking the differences in premiums between large insurance companies by searching for instant quotes online. Two good independent sites are insurancequotes.com and insurancerates.com. You can also get quotes from these insurance companies (StateFarm, Progressive, Geico, etc.) at their individual websites.
   • For more individualized assistance, you'll have to contact an insurance agent in your area. Try searching online  for "auto insurance near me" to find local agents.
3. Compare premiums and discounts. The most obvious point of comparison between car insurance providers for a consumer is in the premium, or the amount that you will pay each month for coverage. Different providers will sometimes offer vastly different premiums for the same coverage. You should also consider the various discounts that are offered by some providers. These will also vary widely between providers and may include good driver discounts or safety equipment discounts, among others.
   • You'll likely have to do your own research to determine which discounts may be offered by your provider and which ones you are eligible for. In many cases, providers do not volunteer this information.
4. Consider other ways to save. There are a number of ways you can reduce your premiums, including:
   • Having other cars insured with the same provider.
   • Having other types of insurance, like home or life insurance, with the same provider.
   • By raising your deductible (the amount of a claim you pay before insurance kicks in).
   • Pay your premium in a lump sum. This usually means paying for six months or one year's worth of coverage in one payment. There is generally an added fee if you pay premiums on a monthly or quarterly basis.

Purchasing Auto Insurance

1. Check the terms of your current policy. If you already have car insurance on another car, your plan may automatically cover any new cars purchased for a few days. Check the terms of your policy or call your insurance company to inquire if you have this benefit. This is particularly useful if you are purchasing a used car over the weekend or if you have bought it through a private transaction (not from a dealer). Keep in mind that you will still have to set up an additional policy for the car when those few days are up.
2. Add the car to your plan before purchasing it. You can add a car to an insurance policy even if you haven't bought the car yet. This will generally require you to have an existing insurance policy. This also requires you to have a particular car picked out, though, as you will need the vehicle identification number (VIN) and some other information to buy the policy. To do this, simply call your insurance provider and set up the policy over the phone or go to your local insurance office.
3. Purchase car insurance after you've bought the car. While you don't need car insurance to buy a used car, you will need it to drive that car anywhere. Without an existing auto insurance policy, you will likely need to visit the insurance provider's office and apply for insurance. You'll need insurance to effectively take possession of the car, even if you've already paid for it.
   • Note that proof of insurance is required by law in most states, so make sure you store a copy of your insurance card in your car in case you are in an accident or get pulled over.

Tips

• As far as insurance goes, the same rules apply for buying a used car from a private seller as from a dealership. That is, you don't need insurance to legally take possession of the car at the DMV. Just be sure that your other paperwork is in order.

Related Articles

• Finance a Used Car
• Know Which Insurance to Take on a Rental Car
• Buy a Used Car from a Private Party
• Apply for a Used Car Loan

Sources and Citations

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