Do you need insurance when buying a used car?
You need insurance when buying a used car because insurance coverage is legally required for all registered vehicles in nearly every state. When buying a used car, your existing policy will automatically extend coverage for a few days until you update it. If you don’t already have car insurance, then you need auto insurance when buying a used car. Shop for coverage now with our free quote comparison tool below.
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UPDATED: Oct 30, 2020
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- Insurance is required in almost every state, regardless of the age of the car
- Consider how much coverage you need to cover the total loss of your used car
- Shop and compare to determine which policy best fits your situation
Many people think about insurance when they buy a new car. They know they should protect their investment because a new car has such a high value. But insurance is something you need regardless of whether your car is new or used.
In the event of an accident, even replacing a used car may put a financial burden on your budget. Insurance will provide peace of mind as you enjoy your newly purchased used vehicle.
Don’t get caught off balance when driving your used vehicle. Compare insurance quotes using our online comparison tool by entering your zip code above!
Why should you insure your used car?
No matter whether your car is brand new or used, you need to protect your investment. While the value of a used car does depreciate from the moment you drive it off the lot, a car is still too valuable an investment to risk.
If you were to end up in an auto collision without insurance, you would be forced to pay the out-of-pocket expense for your collision.
Also, if someone is injured in such an accident, you may be sued by the other party for damages. Insurance was developed for the purpose of avoiding accidents and reducing liability for individual persons.
Without insurance, you run the risk of having to pay large sums of money to satisfy the other party for many types of damages, including personal injury, property damage, and liability.
It’s the Law
Another reason you need to make sure that you carry insurance on a used car is that it’s the law to carry auto insurance. It does not matter whether the car is new or used. Either way, state law requires all drivers to carry car insurance on their car, regardless of the age of the vehicle.
Citations and Fees
If you are stopped in a routine traffic stop and are unable to provide proof of insurance, you can be cited for failure to provide proof of insurance, which could result in fees and increase your insurance premiums down the road.
Insurance companies make decisions on risk factors that influence your premium rates on your policy.
Failing to be covered during a set period is considered a high risk.
Insurance Rates Will Increase
If you do carry auto insurance but were unable to provide proof of insurance at the time you were stopped, you may still have to pay the designated fees. Also, you may experience a hike in your in your insurance rates in some cases.
Police report failure to show validation of insurance as a part of your driving record. Insurance companies do use this type of information to consider your premium rates. You must always carry your proof of insurance in your car at all times.
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How much insurance do you need for your used car?
When it comes to considering how much insurance you need for a used car, there are some factors to keep in mind. You should consider the following things when deciding how much car insurance to carry on a used car.
What is the value of your used car if it was totaled in an accident?
Think About what it would take to replace your car if it were destroyed in an accident. No one likes to think about having a car that is a total loss, but it has to be considered to provide an accurate picture of replacement costs.
If you purchase a car for $10,000, you will need to carry at least that much on your property damage aspect of your policy to be guaranteed of a replacement. An alternative is to carry comprehensive insurance which generally covers all types of loss, including total loss.
How hard will it be to replace parts in the used car?
Another thing you’ll need to consider is how hard it is to replace the parts in a car if you have to have it repaired. Classic cars, for example, are much harder to find parts for than newer cars.
Older cars that are non-classic cars are harder to find than brand new cars. Keep the rarity factor in mind when shopping for insurance policies so that you buy enough insurance to cover the loss of parts and replacement.
Does your used car qualify for classic car insurance?
If your car qualifies for classic car status, you may want to look into purchasing classic car insurance. Most classic car insurance companies have very specific requirements regarding qualifications to obtain this type of insurance.
Do you want to carry collision or comprehensive insurance on your used car?
If your car is more than five years old, you may opt not to carry collision insurance on your car. Think very carefully about this though because some lease and finance companies still may require it on cars you purchased through them.
Also, you may want to insure your car for collision even in cases where you are allowed to drop the coverage so that you are do not place yourself at financial risk without it.
Factors that Could Increase Your Premiums
Many factors could increase your car insurance premiums. These include the following:
- Buying a new car
- Commute distance
- Moving to a new location
- Marital status
- Policy lapse
- Traffic violations
Make sure you understand your policy. The best thing you can do when shopping for car insurance is to ask questions if you do not understand terms or coverage. Often, the terminology used by car insurance companies is familiar to people in the industry, but not to the consumer. If in doubt, ask.
It never hurts to look into something further if it results in a better deal. To do so, enter your zip code into our FREE comparison tool below!