How To Get the Best Deal On Used Car Insurance

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If you are buying a used car, you'll have to buy the required car insurance coverage before you drive it home. If you have an existing car insurance policy on another car, you have a 30 day grace period to add your car to it.[3] Remember that a used car can cause just as much damage as a new car. While two states do not require their drivers to carry any auto insurance, every other state has a minimum amount of coverage that is required by law. Here are all the important details about insuring a used vehicle.

Key Takeaways

  • Never drive without car insurance.
  • You can’t buy a car in most cases unless you insure it before driving home or having it delivered.
  • Car insurance is cheaper on a used car than a new model of the same car.
  • How much coverage you need depends on state laws and how much your used car is worth.

Do You Need Insurance Before Buying a Used Car?

You will need to show proof of insurance to buy your used car if you buy one from a dealership. If you buy directly from an owner, they are also required to ask for proof of insurance. You even need to show proof of insurance if you buy your car online, from a vendor like Carvana.

While a private seller may neglect to ask for proof, it’s a terrible idea to drive the car home while it’s uninsured. The police won’t care that you just bought the car and were planning to buy insurance. It’s illegal to be driving a motor vehicle without state minimum car insurance. It’s not worth it, so compare car insurance rates while filling out the paperwork at the dealer.

What Happens If I'm Caught Without Car Insurance?

Driving without car insurance means penalties, and these penalties are much harsher for an uninsured motorist who causes an accident. If you are pulled over for a routine traffic stop and law enforcement discovers you have no insurance, the following sanctions are not uncommon for a first offense:

  • A $500 fine
  • Suspension of license and registration until proof of insurance is produced
  • Impoundment of vehicle
  • Community service or jail time
  • SR-22 requirement

Every state has its own particular laws. In Georgia, for instance, a first-offense uninsured driver could get a $1,000 fine, a 60-day license and registration suspension, a one-year jail sentence and a three-year SR-22 requirement. It is important to remember that the other driver's auto insurer may sue you.[4]

What Types of Insurance Are There for Used Cars?

The same car insurance coverage types are available for used cars as there are for new ones. You’ll need to buy your state’s required coverage and have the option of adding collision and comprehensive coverage if you’re not already required to carry them by a lender.

Below are commonly required coverage types in 2023 and their limit ranges [1]:

Coverage Type

Commonly Required Coverage Amount

Bodily injury liability

$15,000 to $50,000 per person and $30,000 to $100,000 per accident

Property damage liability

$5,000 to $25,000 per accident

Uninsured/underinsured motorist bodily injury

$20,000 to $50,000 per person and $40,000 to $100,000 per accident

Uninsured/underinsured property damage

$5,000 to $25,000 per accident

Personal injury protection (PIP)

$5,000 to $50,000 (only for states that offer no-fault insurance)

Collision and comprehensive

These coverages are required only if you’re financing your car.

Car insurance endorsements — optional add-ons worth considering — are also available and can offer useful benefits, like roadside services if your car breaks down. Roadside services include flat tire changes, tows, fuel delivery and locksmith services, which are useful for a used car with parts that may break down due to wear and tear.

You will not be able to buy gap coverage for a used car unless it’s fairly new. Gap insurance helps pay off your car loan if your preowned car is totaled or stolen and you owe more on your loan than the car's depreciated value.[4]

How Much Car Insurance Do I Need for a Used Vehicle?

Your need for sufficient liability limits won’t change because that is always for repairs to the other car if you’re at fault for the accident. Uninsured/underinsured coverage and PIP requirements are also stipulated at the state level, if they are required in your state.

When it comes to collision and comprehensive coverage, however, you’ll pay much less in car insurance than if you were insuring a new car of the same make and model. How car insurance works is that collision and comprehensive cover your car when you’re at fault for the accident. You’ll need to determine the market value of the car because that’s the maximum amount you will be paid out by the insurance company if your car is stolen and not found or if it is totalled.

How Much Does Used Car Insurance Cost?

The average car insurance rate in the U.S is $1,834.86 a year, according to an average of 365 days worth of car insurance quotes delivered via SmartFinancial. This number includes new and used cars. Used cars, on average, cost roughly $800 a year. [1]

How much your auto insurance costs partly depends on how much insurance you buy, your driving history as well as the value and safety of your car. Auto insurance companies also generate a rate based on the insurance customer, including their age, gender, marital status, place of residence, driving record, lapses in insurance and, in some states, credit score.[2]

You are required to buy more insurance in some states. Every state (except for New Hampshire and Virginia) has its own minimum requirements for liability insurance, which pays for the injuries and property damage an at-fault policyholder causes others.

However, some states require not only liability insurance but also uninsured motorist protection and personal injury protection (PIP) or medical payments coverage (MedPay). In Massachusetts, for example, drivers of newly purchased car or older car must purchase the following amounts of auto coverage for the following types of auto coverage:

  • $20,000 bodily injury liability per person
  • $40,000 bodily injury liability per accident
  • $5,000 property damage liability per accident
  • $20,000 uninsured motorist coverage per person
  • $40,000 uninsured motorist protection per accident
  • $8,000 personal injury protection

These limits apply to used and new cars in Massachusetts alone. Here’s where to find your state's mandated requirements, minimum amount of auto coverage and average rates.

The average cost of used car insurance is roughly $800 a year but varies significantly by the car's model, make, year and your location.

Is it Cheaper To Insure a New or a Used Car?

Used cars had an average price of $25,500, notes KBB, while new cars had an average price of $42,736. You’ll pay considerably less money on car insurance with a used car. Plus, you’re not required by law to buy anything more than the state minimum if you buy the car upfront instead of financing it.[5]

Also, auto insurance rates vary from state to state, from insurance company to insurance company. As you can see, there are too many variables to give any hard-and-fast answers about the cost of used-car insurance. But if you are looking for cheap car insurance quotes, comparison shopping is the best way to save money on a car insurance policy.

Cheap Full Coverage Insurance for Used Cars

How Does Insurance for a Used Car Differ From Insuring New Cars?

Insuring a used vehicle that is almost 10 years old or older has advantages and disadvantages:

  • Since the vehicle has depreciated in value, its car insurance coverage may cost less than a new car's car insurance cost because an old car is cheaper to replace than a new car.
  • An older used car, especially a classic car, may cost more to insure than a new car because an older car's parts may be harder to find and thus more expensive. It all depends on the car.
  • Since a used vehicle may not have the latest safety features and anti-theft devices, it may not be eligible for certain safety and anti-theft discounts that can lower your car insurance rate. For example, only 15% of older cars have blind-spot monitors. You can always buy these features aftermarket to get a discount.
  • The most common safety and anti-theft features have been around for longer than eight and a half years. For example, federal law has required front airbags in all new passenger vehicles since 1999. Also, car manufacturers have installed tracking systems in their vehicles since 2010, a system that can find a car that’s been stolen.
  • While a new vehicle will usually get full coverage (that is, collision and comprehensive insurance along with state minimum requirements), you will probably not need full coverage for a used car worth about $3000 or less.
  • If you use an auto loan to finance your used car, your lender will probably require full coverage to protect its investment.

Ask your agent about all the discounts they offer and see if any match. You can get insurance discounts on a used car for:

  • Having anti-theft devices on the car. You can buy these after-market too, if your car is not equipped with them.
  • Having a clean driving record.
  • Buying a safer car.
  • Being a good student
  • Certain professions or affiliations and memberships.
  • If you have an existing car insurance policy, add the newly purchased used car to the policy for a multi-car discount.

The best way to automatically save money is compare car insurance quotes to see who will offer you the best rate for the coverages you want.

You will need to show proof of insurance to buy a used car.

How To Get the Best Deal on Used Car Insurance FAQs

Can I buy a used car without insurance?

It’s close to impossible to buy a used car without insurance. The dealership won’t let you drive away with it, and a car-buying app will require proof before they ship out a car. If you’re buying directly from an owner, they too are supposed to ask to see proof of insurance. There’s a chance they may forget or just give you a break, but you’re in deep trouble if you are caught driving without state required coverages. The only exception is if you have car insurance on another vehicle, in which case you may have a 30-day grace period of coverage and time to add the new used car.

Is a separate policy required for a used car if I already have insurance?

You do not need to take out a separate policy. You may be able to list the used car on the existing car insurance policy. The great thing about doing this is you’ll be eligible for a multi-car discount.

Should I get gap insurance on a used car?

Unless the car is fairly new, you will not be able to buy gap insurance on the used car. Ask the dealer if it’s possible to buy it or if it has too much mileage or is too old.

Should I get full coverage if I’m buying a used car?

Whether or not you should buy full coverage (collision and comprehensive coverage) depends on the value of your car and whether or not you will want a payout if your car is damaged or totaled due to your own negligence. Liability coverage, which is required, will only cover the damages and losses to the other driver when you’re at fault.

With that said, it makes very little sense to pay for insurance if the car is worth only $1,000. Consider that you’d have to pay the deductible first, which may cost $1,000. Consider what you’d be paying each year in coverage and if it makes sense based on the value of the car.


  1. SmartFinancial’s internal quoting data. February 2, 2023.
  2. Insurance When Buying a Used Car.” Progressive. February 2, 2023.
  3. 8 questions to ask before buying auto insurance.” Insurance Information Institute. February 2, 2023.
  4. Auto Insurance.” NAIC. Feburary 2, 2023.
  5. "Average Used Car Price Falls Under $28K." KBB. February 2, 2023.

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