Used car insurance cost and requirements
Car insurance is required by law in almost 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 out of the field. Here’s an overview of what drivers need to know to protect themselves and their vehicles.
How does insurance work when buying a used car?
Used car insurance is pretty much the same as car insurance policies for new vehicles. Almost all states require drivers to have liability insurance. This pays for damages if the policyholder injures another person or damages property while driving.
Many car insurance policies also include protection for the vehicle itself. Although not required by law, lenders generally will not approve an auto loan unless the driver has collision and comprehensive coverage on the vehicle. This way, if it is totaled in a wreck, the lender can still recover the value of the car.
Buy from a used car dealership
Used car dealerships require all drivers to provide proof of insurance before they can drive a vehicle off the lot. For those who do not yet have insurance, it is important to purchase a policy in advance so as not to have any setbacks.
Buy from a private seller
Private sellers may not be as strict about proof of insurance before allowing someone to test drive or buy their vehicle. But that doesn’t change the law. Drivers still need at least the state’s minimum liability coverage to drive legally.
How to get insurance before buying a used car
Here are the most important steps a driver should take to get insurance before buying a used car:
Decide which type of policy is best
First, the driver should think about the type of coverage he is looking for. They’ll need to check off all of their state’s auto insurance requirements, but they can also decide to purchase additional coverage.
Drivers considering an auto loan should check with their lender what additional coverage they need to purchase to secure the loan.
Decide how much car insurance you need
It’s often best to buy more than the state’s minimum auto insurance when possible. Car accidents can be expensive, especially when someone is injured. Having higher policy limits reduces the risk of the driver having to pay much of the damage out of pocket.
Compare auto insurance rates and providers
Once drivers have a clear idea of the type of coverage and policy limits they want, they can start comparing quotes from top auto 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 auto insurance can add another vehicle to their policy by contacting their insurer. Larger companies may allow the driver to add vehicle 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 for the number of miles on the vehicle.
Car insurance grace period
Drivers who already have insurance usually have a grace period during which the insurance company will cover the new vehicle even if the driver has not yet added it to the policy. Grace periods are generally around 30 days, although some may be shorter. Always check with the insurer what their grace period is before buying a new vehicle and be 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 quite similar to new car insurance. Both offer the same essential protections for a car. However, there may be some optional coverages that are not available for used cars.
For example, New Car Replacement is an optional endorsement that many insurers offer to drivers of new vehicles. Essentially, it pays to replace a covered vehicle with an all-new version if totaled within the first year or two of ownership. But those buying used cars won’t have the option to add this to their policies.
However, overall, drivers have the same coverage options whether they are insuring a new or used vehicle and whether they are buying a car from a dealership or a private seller.
How much does used car insurance cost?
There is a lot of variation in car insurance costs by state. Some 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 the 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 that a used car will be cheaper to insure is a classic used car fallacy. The only way to know for sure how much it will cost to insure a used car is to get quotes from multiple insurers.
How long does it take to buy used car insurance?
Drivers can get auto 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 inform them of the purchase.
For drivers who do not yet have car insurance, it may take a little longer. They should set aside time to compare quotes from multiple vendors before choosing one. But drivers can do it in an afternoon in most cases.