Used Car Insurance
Many people prefer to buy used cars over new ones fresh off the lot. New cars may be too expensive, or they may prefer to wait until the car’s depreciation stabilizes. Waiting a few years to buy a car is also a good way to make sure that the vehicle won’t have any factory glitches or dangerous recalls. No matter why you decide to buy a used vehicle, you will need to purchase auto insurance in order to register and drive the car.
Buying a used car is an affordable option, and in some cases it will be cheaper to insure than a new car. The vehicle will cost less to replace than a new car, and you may not need as much coverage. On the other hand, it’s easy to pay too much for car insurance for an older vehicle, so it’s important to check all of your options and be sure that the policy you buy is exactly what you need.
When to Get Auto Insurance
You usually have 30 days to get a car put into your name if you have existing coverage but do check with state laws. You will need insurance before you can register it and even though you can purchase this insurance at any point in those 30 days, it’s a good idea to obtain coverage as soon as possible so that you are protected from potential accidents or other damage.
If you buy the used car from a dealership, the salesman will be able to provide the insurance company with any information they need to set up the policy. If you buy from another individual, you can call the insurer yourself and update the information; everything you need to know about the car to purchase the policy should be listed on the title.
What Coverage Do You Need?
Depending on the age of the vehicle you drive, you may decide to carry full coverage insurance or you might be better served with a liability-only policy. Newer-model vehicles and those with a lien should carry full coverage to protect them against damage; lien holders require this and even if you own the vehicle outright, new vehicles can be prohibitively expensive to replace.
When purchasing a used vehicle, take into account the condition it’s in, its age, how long you plan to keep it and how much it’s worth. This will help you decide how much is worth spending on a policy. You can also take note of the coverage that you think is necessary; if this will be your only car, you may need rental reimbursement coverage, but you can skip this coverage if you have a backup vehicle,for example.
Cars that have depreciated in value do not require full coverage, and it may be a waste of money to carry collision, comprehensive and other first-party coverages on an older vehicle’s policy. Once a car’s value has dropped to a few thousand dollars, it can cost more to insure the car for a year than it would to replace it. If a car in this situation sustains any damage at all, it may not be worth repairing; the insurance company will probably deem it a total loss if it gets into an accident.
Once a vehicle has reached this point, you may wish to drop your coverage to a liability-only policy. Take care that you don’t drop your liability limits below state requirements, however, and be sure that you carry any other state-mandated coverage like personal injury protection. You can check with your agent or the DMV to see what the state requirements are for auto insurance.
Buying Affordable Coverage for Used Cars
Buying a car, whether new or used, provides you with an opportunity to reduce the cost of your premiums by choosing a vehicle that will be affordable. Doing some research in advance can help you find the cheapest cars to insure by model so that you can narrow your search. If you already know what kind of car you want to buy, you can get a preliminary quote online to get an idea of how much the coverage will cost.
Certain after-market additions to a used car may help reduce the overall cost of coverage. For example, installing a car alarm or other anti-theft device might lower your premiums. Check with your insurance company to see if there are any discount programs you can take advantage of that might lower your insurance costs.
Due to the value of the vehicle and the reduced coverage you can carry, insuring a used car is often more affordable than insuring a new one. Take care that you don’t buy more coverage than your car needs so that you don’t spend more than you have to on insurance.