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Used car insurance: Here’s what you need to know

Used cars definitely need liability coverage, and maybe also comprehensive and collision coverage. The average cost of a full coverage policy on a 2017 Toyota Camry is $1,721 per year.

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Rachael Brennan

Rachael Brennan

Senior Editor & Licensed Auto Insurance Expert

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Published|6 min read

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Buying a used car can be a great way to save money. Used cars usually cost less than new ones, and they don’t lose value as quickly as new cars, either. And, depending on the make and model, a used car can also help you save money on car insurance.

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Buying a used car can save you money on your car insurance, but you need to consider the cost of insurance before you make a purchase (as well as how much coverage you actually need). The best way to know exactly how much insurance will cost for any car, new or used, is to get quotes from insurance companies before buying a car.

Key takeaways

  • Liability coverage is a must for used car owners, but comprehensive and collision insurance can also be valuable, even if you are driving a used car.

  • Your insurance rates will vary based on lots of factors, but we found that the average driver pays $1,721 for full-coverage on a 2017 model.

  • It is important to have as much liability coverage as you can afford, preferably 100/300/100 or more if you can manage it, because a serious accident could cost you tens or even hundreds of thousands of dollars.

  • When buying a used car, you can add it to your current policy before buying it or buy a new policy online (or over the phone) before driving away in your car.

What kind of insurance should I get for a used car?

At the very least, people buying a used car need to buy liability insurance. Not only is liability coverage required by law in most states, but it pays for damage you cause to other drivers and their property in an at-fault accident

It is important to have as much liability coverage as you can afford, preferably 100/300/100 or more if you can manage it, because a serious accident could cost you tens or even hundreds of thousands of dollars.

Type of coverageWhat does it do?Who needs it?
Liability coveragePays for damage or injuries you cause to other people and their property. Divided into two parts: bodily injury liability and property damage liabilityEverybody, including drivers with used cars
Comprehensive coveragePays to repair or replace your car when it is damaged by falling objects, vandalism, storms/weather, animals, or theftDrivers who cannot afford to replace their car out-of-pocket, or who lease or finance a car
Collision coveragePays to repair or replace your car when it is damaged in a collisionDrivers who cannot afford to replace their car out-of-pocket, or who lease or finance their car
Personal Injury Protection (PIP)Covers medical expenses for you and your passengers after an accident, regardless of who was at faultDrivers in no-fault states, whether their car is new or used
Uninsured/Underinsured motorist coverage (UM/UIM)Pays for medical costs when someone else causes an accident and doesn’t have the insurance they need to cover itDrivers who want extra protection if they are hit by an uninsured or underinsured driver, drivers in states where UM/UIM is required
Roadside assistancePays for emergency services when you’re stranded on the side of the road, including towing, tire changes, and gas, oil, or battery deliveryDrivers who want extra protection if they break down on the side of the road, especially valuable for drivers with used cars.
Gap coveragePays the difference between what you still owe on a used car and it’s depreciated value if it gets totaledDrivers who financed their used car

Each state has its own unique insurance requirements, so if you aren’t sure how much insurance you need, an insurance expert can answer any questions you may have and help make sure you have enough coverage.

Is it worth having comprehensive and collision insurance on an old car?

It can be, depending on the value of your old car. You should strongly consider having both comprehensive and collision insurance for any vehicle that you can’t afford to replace out-of-pocket if it is damaged, totaled, or stolen (a policy with comprehensive and collision coverage is called a full-coverage policy).

But not every used car needs full coverage. When you’re deciding between full coverage and liability-only coverage for a used car, consider how much you paid for it and how much it’s currently worth. If you paid $2,000 for an old model for your newly-licensed teen, it may not be worth paying for comprehensive and collision coverage.

→ Learn more about cheap liability-only car insurance

How much does used car insurance cost?

Insurance rates vary based on a number of factors, including how much insurance you buy. The rates in the chart below show how much different levels of car insurance cost for a 2017 Toyota Camry:

Amount of coverage for 2017 Toyota CamryAverage annual premium
Full with 100/300 BI$1,822
Full with 50/100 BI$1,721
State Minimum$621

Insurance rates also vary from one company to another. The same driver could insure the exact same car with two different companies and be quoted wildly different rates. The chart below shows the average rates for a 2017 Toyota Camry with some of the top insurance companies in the country:

Company

Average annual premium

MAPFRE

$1,040

USAA

$1,048

Auto-Owners Insurance

$1,070

Erie

$1,139

GEICO

$1,187

American Family

$1,227

State Farm

$1,383

Nationwide

$1,463

NJ Manufacturers

$1,481

COUNTRY Financial

$1,543

Travelers

$1,580

Amica

$1,687

Progressive

$1,758

National General

$1,819

Farmers

$1,934

The Hartford

$1,939

Allstate

$1,974

CSAA

$2,318

MetLife

$2,431

Mercury Insurance

$2,554

The size of the insurance company doesn't necessarily make a difference in price. Some small insurance companies have lower rates than their larger counterparts.

How do I get car insurance before I buy a used car?

It is possible to get car insurance before you buy a car, even if you don’t know exactly which car you’re taking home. There are several ways to insure a used car that you’re about to buy, including:

  • Buy an insurance policy on the spot: If this is going to be your first car or you’ve been without insurance for a while, you can shop around and buy a policy before handing over a check for a used car, even right from the dealership. The process is usually pretty quick, sometimes less than 15 minutes, so there is no reason you have to drive a car without insurance.

  • Add the car to your current insurance policy: If you already have car insurance on another vehicle, you can call your insurance agent and add another car to your policy, either right before or right after you’ve bought your used car.

  • Use your grace period, if you have one: If you already have car insurance and you are buying a used car, you may have a grace period during which the company will cover you even if you haven’t officially added the car to your policy. 

If you take advantage of a grace period (they’re typically no longer than 30 days and sometimes as short as just a few days), it is important to know that your coverage will be backdated to the date you purchased the car. 

That means this isn’t a sneaky way to save money on your car insurance, but it is nice to know that if you buy a car on a Sunday or in the evening, you are still covered if you are in an accident while driving your new (used) car home from the lot. 

State laws and company policies vary, so make sure you know the rules as they apply to your insurance before assuming a grace period applies in your situation.

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Do I need insurance when buying a used car from a private seller?

Yes, you need to have car insurance even when you’re buying a used car from a private seller. When you buy a car (new or used) from a dealership, they will probably require you to have insurance in place before you drive the car off the lot. 

On the other hand, a private seller likely doesn’t know or care if you have a car insurance policy in place, they just want to sell the car, which means they probably aren’t going to ask you to add the car to your policy before you drive away with it.

But just because the private seller won’t stop you from driving away without insurance doesn’t mean it is a good idea. Car insurance is required by law in almost every state, and even in the states where it’s not mandated, you need to be able to pay for any damage you cause.

Genius tip

Without insurance you are in danger of being uninsured. If you are at fault in an accident and you don’t have insurance, you are still responsible for any damage you cause to the other driver and their property, potentially tens of thousands of dollars or more in bodily injury and property damage costs out-of-pocket.

Why does a used car cost less to insure?

Car insurance companies use a number of factors to determine your rates, and one of the biggest factors is how much it will cost to repair or replace your car if it is damaged or stolen

An older car is usually much cheaper to repair or replace than a newer, more expensive vehicle, which means they likely have cheaper comprehensive and collision rates.

An older, more affordable car also means the driver is more likely to be able to pay for a new car out-of-pocket after an accident. If you can afford to replace your car without filing an insurance claim, you can choose to buy liability only coverage, which can save you hundreds of dollars each year on your car insurance.

But car insurance isn’t always cheaper for a used car — if your used car has parts that are no longer in production or supply chain issues have driven the cost of used cars higher than some new cars, you may end up paying more for insurance on a used car than you would a new vehicle.

What old cars have the cheapest insurance?

Some cars are much cheaper to insure than others. Generally speaking, family sedans are cheaper to insure than faster, sportier vehicles, but every insurance company has its own internal rating system to determine how much they should charge for each vehicle.

Frequently asked questions

What type of insurance do you need to buy a car?

Drivers who are purchasing a car are required to have at least the minimum amount of liability insurance mandated by their state. If you have a loan on your used car the lender may also require you to buy comprehensive, collision, and gap insurance as part of the terms of your loan.

Can you drive a car home after buying it without insurance?

Most states require you to have insurance coverage to legally drive your car, so you should have insurance in place before you drive your new (or used) car home. However, if you already have a car insurance policy in place, you likely have a grace period where you are covered before you add your new car to your policy.

What does full coverage insurance cover?

Full coverage is a term used to describe a policy that includes liability, comprehensive, and collision coverage. A full coverage policy may also include other coverages, like uninsured motorist insurance or roadside assistance, depending on your needs and the laws in your state.

What is the most important type of car insurance you should buy for a used car?

Liability insurance is the most important type of car insurance for any car. Liability insurance pays for damage you cause to another driver or their property if you are at fault in an accident.

Methodology

Policygenius has analyzed car insurance rates provided by Quadrant Information Services for every ZIP code in all 50 states, plus Washington, D.C. 

For full coverage policies, the following coverage limits were used:

  • Bodily injury liability: 50/100

  • Property damage liability: $50,000

  • Uninsured/underinsured motorist: 50/100

  • Comprehensive: $500 deductible

  • Collision: $500 deductible

In some cases, additional coverages were added where required by the state or insurer.

Rates for overall average rate, rates by ZIP code, and cheapest companies determined using averages for single drivers age 30, 35, and 45. Our sample vehicle was a 2017 Toyota Camry LE driven 10,000 miles per year.

Rates for driving violations and “poor” credit were determined using average rates for a single male 30-year-old driver with a credit score under 578.

Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.

Author

Senior Editor & Licensed Auto Insurance Expert

Rachael Brennan

Senior Editor & Licensed Auto Insurance Expert

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Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

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