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Used Car Insurance

Updated
Kailey Hagen

Our Insurance Expert

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Auto insurance is required by law in nearly every state, and whether a driver buys from a dealership or a private seller, they need used car insurance before they can legally drive the car off the lot. Here's a closer look at what drivers need to know to protect themselves and their vehicles.

How does insurance work when you buy a used car?

Used car insurance is pretty much the same as auto insurance policies for new vehicles. Nearly all states require drivers to have some liability insurance. This pays for damages if the policyholder hurts another person or damages property while driving.

Many car insurance policies also include protection for the vehicle itself. While not required by law, lenders usually won't approve a car loan unless the driver has collision and comprehensive coverage on the vehicle. This way, if it's totaled in a wreck, the lender can still recoup the value of the car.

Buying from a used car dealer

Used car dealerships require all drivers to provide proof of insurance before they can drive any vehicles off the lot. For those who don't have insurance already, it's important to purchase a policy in advance so they don't run into any hiccups.

Buying from a private seller

Private sellers may not be as strict about proof of insurance before they allow someone to test drive or purchase their vehicle. But that doesn't change the law. Drivers still need at least the state minimum liability coverage in order to drive legally.

How to get insurance before buying a used car

Here are the most important steps a driver must take to get insurance before buying a used car:

Decide what type of policy is best

First, the driver needs to think about what kind of coverage they're looking for. They'll need to check off all the car insurance requirements their state has, but they may decide to purchase additional protections as well.

Drivers who plan to take out an auto loan should check with their lender to see what extra coverage they're required to purchase in order to secure the loan.

Decide how much car insurance you need

It's often best to purchase more than state minimum car insurance whenever possible. Car accidents can get expensive, especially when someone is injured. Having higher policy limits reduces the risk of the driver having to pay for a lot of the damages out of pocket.

Compare car insurance rates and providers

Once drivers have a clear idea of the type of coverage and policy limits they want, they can begin comparing quotes from top car insurance companies. It's best to get a few quotes and evaluate each company's pricing, coverage options, and customer service before purchasing a policy.

How to add a used car to your existing insurance policy

Drivers who already have car insurance can add another vehicle to their policy by contacting their insurer. Larger companies may enable the driver to add the vehicle's details through their online account while others may require the driver to call the company and speak to a representative.

In order to add a new vehicle, the driver will need to know the make and model of the vehicle as well as its vehicle identification number (VIN). The insurer may also ask about the number of miles on the vehicle.

Car insurance grace period

Drivers who already have insurance typically have a grace period where the insurance company will cover the new vehicle even if the driver hasn't added it to the policy yet. Grace periods are usually about 30 days, though some may be shorter. Always check with the insurer to verify what its grace period is before purchasing a new vehicle, and make sure to add the vehicle to the policy before it expires.

How is used car insurance different from new car insurance?

Used car insurance is pretty similar to new car insurance. Both provide the same essential protections for a car. However, there may be certain optional coverage that isn't available to used cars.

For example, new car replacement is an optional endorsement many insurers offer drivers of new vehicles. Essentially, this pays to replace a covered vehicle with a brand-new version if it's totaled within the first year or two of ownership. But those purchasing used cars won't have the option to add this to their policies.

However, by and large, drivers have the same coverage options whether they're insuring a new vehicle or a used one and whether they purchase a car from a dealership or a private seller.

How much does used car insurance cost?

There's a lot of variance in car insurance costs by state. Certain states have higher average car insurance premiums because they see more natural disasters or have a large number of uninsured drivers. Areas prone to vehicle theft also tend to have higher rates.

The vehicle itself also has a significant effect on price. Generally, used cars are cheaper to insure than new cars because the cost of the vehicle and its parts have depreciated. This makes them cheaper to repair. But automatically assuming a used car will be cheaper to insure is a classic used car mistake. The only way to know for sure how much it will cost to insure a used car is to get quotes from several insurers.

How long does it take to get used car insurance?

Drivers can get car insurance coverage for a used vehicle in as little as a few minutes if they already have an auto insurance policy. All they have to do is contact their insurer and let them know about the purchase.

For drivers who don't already have car insurance, it may take a little longer. They'll need to set aside some time to compare quotes from several providers before they choose one. But drivers can do this in an afternoon in most cases.

FAQs

  • It's typically cheaper to insure an older vehicle, though this isn't always the case. The only way to know how much it will cost to insure a vehicle is to get quotes from insurers.

  • Vehicles tend to depreciate quickly as soon as they're driven off the lot. Used cars have often lost a lot of their value already, but this makes them cheaper to repair than new cars. That's why many insurers offer lower rates to drivers of used cars.

  • Yes, drivers purchasing a used car at a dealership won't be able to drive the car off the lot without proof of insurance. Private sellers may not ask to see proof of insurance, but drivers are still required to have coverage by law in most states.

  • Lenders may require drivers to purchase gap insurance on a used vehicle if they have an auto loan. This type of coverage ensures that, if the car is totaled, the lender gets all its money back.