Car Insurance for Used Cars
So you’ve bought a car that’s new to you. Not only is a used car cheaper than its brand new counterpart, car insurance for your used car is generally cheaper too. Take advantage of the savings by using these tips:
First, be sure you check the safety and reliability of your new (used) car. Insurance companies evaluate your risk partly based on your car’s history. Any significant accidents or repairs will drive up your premiums. You can access your car’s history before you buy it through websites such as Carfax.com. The insurance company you choose, however, will evaluate your premiums based on their own claims data, so be sure you discuss your car’s history with your salesperson before you commit to buy.
Second, since collision and comprehensive insurance covers the fair market value (also called actual cash value or “ACV” by insurers) of your car, buy insurance that covers the comparable market value for your vehicle. Every state requires you to keep minimum liability protection, but if you plan to protect your own vehicle through collision or comprehensive, make sure you’re not paying more than necessary relative to the value of your car. For example, let’s say your car is worth $1,000 and its totaled in an accident. Let’s also assume you pay $400 a year for comprehensive and collision coverage, with a $1,000 deductible. When your car is totaled you won’t receive anything from the insurer, and you’re still out the $400 in premiums.
Also, with a used vehicle, consider whether cosmetic damage or other minor car repairs are worth covering with your insurance. If you choose to forego claiming those on insurance, you can keep your premiums lower.
You should also research the theft rate on your car model. More frequently stolen car models yield higher insurance premiums, whether new or used. Since many used cars don’t include anti-theft or tracking devices, used car models that have a higher probability of theft may actually have higher premiums than their new counterparts.
Antique or classic cars can be an exception to this advice since the value of those tends to be higher. Talk to a classic car insurance specialist about the insurance plan that’s best for your vehicle.
Other than these tips, shopping for car insurance on used cars is the same as shopping for insurance on new vehicles. Just like for new cars, insurance companies will consider your credit, driving record, who’s named on your insurance policy, and other risk factors, such as where you live. To maximize your opportunity for cheaper premiums, make sure you keep a clean driving record, repair your credit, consider whether or not to place risky drivers on your policy, and expect premiums to go up if you live in a city or other risky environment.
To ensure the best rates for you, consider all these factors and shop around with several agents before you buy. You may find bundling your insurance with other types of insurance, such as home insurance or life insurance, will help you save money. Also, if you already have auto insurance on another vehicle, ask your insurance agent about adding your new (used) vehicle to your existing policy for a multi-vehicle discount. You can usually save money by insuring all your vehicles with the same company or policy.