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Key Takeaways

  • New cars include the newest safety features but are more expensive and have higher insurance prices.
  • Due to the decreased value of a used car, there might not be a requirement for expansive coverage options.
  • The difference in insurance coverage rates of a used and new car will vary based on different factors involved in estimating the insurance rates.

New Car vs. Used Car Insurance

New or used cars become essential at one point for everyone. What we might not realize immediately is the insurance that is required for both car types. The high price of a brand-new car has positively affected used car sales, as more people are looking forward to switching to buying used cars.

The rates of purchasing a used car might be less than that of a brand-new car. But what about their insurance rates? However, since the used car market has also picked up a great pace with soaring rates, you can save money on your car by buying used cars that have cheap insurance rates.

Here we look at the different coverage required, the best car insurance companies, and things to consider while buying a car of your choice while keeping your finances in check.

New or Used Car: Which is cheaper for insurance?

Although the retail price of a new vehicle is often more than that of a used vehicle, this is not always the case for insurance. Modern safety features, replaceable parts, and other elements frequently contribute to the low insurance costs of some new cars. Thus, new cars being pricey to purchase and maintain is not always the case.

In addition to this, the specificity of car insurance relies on a string of driving and non-driving factors, making it highly variable as well. The average monthly premium of a new car is $147, while it is $129 for a used car.

Company Monthly Premium for
a New Car
Monthly Premium for
a Used Car
Allstate $208 $160
Farmers $161 $164
Liberty Mutual $157 $148
Nationwide $117 $106
Progressive $161 $135
State Farm $126 $115
USAA $124 $93

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Required Type of Coverage

The state insurance requirements to drive a car around are more or less the same whether you own a brand-new or a used car. However, the requisites can vary from state to state. The two major liability insurance coverage required by any state would be property and bodily injury liability coverage. In case you are to insure a used car that is leased, then you might have to consider additional coverage options.

Property Liability Coverage

Your property damage liability coverage pays for property damage caused by an accident for which you are at fault. It is required to cover at least $10000 per accident.

It could cover the cost of repairing or replacing the other party's vehicle and other damaged property, like fences, structures, telephone poles, and other types of property. It also covers damage to other kinds of property, including fencing, mailboxes, and buildings caused by the policyholder's vehicle.

Bodily Injury Liability Coverage

During an at-fault accident, the bodily injury liability coverage will cover the medical expense of others. It is usually a minimum of $25,000 per person and $50,000 per accident.

The other liability coverage that some states require you to possess would include personal injury protection and uninsured and underinsured motorist coverage.

Personal Injury Protection

Falling under the minimum liability coverage, this coverage might come in handy to pay your medical expenses in a collision if you live in a no-fault state.

Medical Payments Protection

Medical payments coverage, also known as MedPay, is an additional coverage option for auto insurance policies in most states. Even if you are at fault in a car accident, this coverage could help pay for your medical bills or those of your passengers.

Uninsured/Underinsured Motorist Coverage

A minimum coverage that proves to be useful in an accident involving an uninsured motorist.

Rental Reimbursement Coverage

This coverage reimburses you for transportation expenses, such as a rental car or public transportation fare, incurred while your vehicle is being repaired following a covered claim.

Ridesharing Coverage

You might want to consider this coverage if you drive for a ridesharing company. This is not usually included in a standard policy. However, many providers offer it as a separate policy coverage option.

Sound System Coverage

Even though this is not essential coverage, since sound system theft is common, this will protect the sound system against unprecedented theft and attacks.

Towing and Labor Cost Coverage

This is available as optional coverage by most insurance providers under roadside assistance coverage. This will assist you with towing or battery replacement in an emergency.

New Car Replacement Coverage

Recent models which are insured under the new car replacement coverage are eligible for the payment of a new car if your car is stolen or totaled within a timeframe.

Gap Coverage

Gap coverage is an optional option by many insurance providers. This will assist you with towing or battery replacement in an emergency.

How do car insurance requirements differ for a new vehicle versus a used car?

Insurance companies don't offer standalone policies for new and used cars. Instead, the difference in policy options is based on the age of the car and the other driving and non-driving factors.

Based on whether you have financed or leased the car, the coverage requirements might vary. Depending on the age of the car, you can opt out of a few coverage options as well. The model of your car can also influence car insurance rates.

Requirement Old Car New Car
Coverage Type It is not required to carry collision or comprehensive coverage. It is a choice based on the age and the existing condition of the car. If it is financed or leased, then it is wise to carry full coverage, which might be expensive.
Coverage Cost Used cars which have easily available cheaper parts make it cheaper to insure as it is easier to also opt out of extra coverage. If it has expensive parts, then the coverage costs can tend to be higher.
Spot on safety features can reduce coverage costs, even if you are opting for full coverage.
Discounts Since the likelihood of requiring a repair is higher in an older car, there won't be many discount options. Newer cars may be eligible for different discount options due to better features and safety equipment.

Insurance Rates by the age of the Car

Your annual premium for car insurance will go down by 3.4% for every year that your vehicle is older. A car that is eight years old has an insurance premium that is around twenty-five percent lower than a car that is brand new.

Age of the Car (in years) Average 6-month Premium
New $919
1 $832
2 $836
3 $808
4 $782
5 $754
6 $782
7 $716
8 $695

Best Car Insurance Companies for Used Vehicles

We have taken into account the nationally recognized car insurance companies that provide the best rates for used vehicles. USAA, open to military members and veterans, maybe the cheapest option available. However, State Farm and Nationwide give competitive pricing as well.

Used Honda Accord Average 6-month Premiums

For a used Honda Accord, USAA, State Farm, and Nationwide provide the best rates. The highest rates are for the 2018 Accord models across providers.

Company 2014 2017 2018
Allstate $931 $1,059 $1,110
Farmers $771 $841 $877
Liberty Mutual $812 $878 $903
Nationwide $588 $596 $592
Progressive $781 $801 $560
State Farm $671 $715 $750
USAA $492 $540 $539

Used Honda Civic Average 6-month Premiums

For a six-month-old used Honda Civic, the best rates are provided by State Farm, Progressive, and Nationwide, along with USAA.

Company 2014 2017 2018
Allstate $967 $1,080 $1121
Farmers $931 $1040 $1073
Liberty Mutual $857 $916 $949
Nationwide $760 $740 $726
Progressive $733 $767 $777
State Farm $697 $763 $783
USAA $500 $542 $543

Used Toyota Camry Average 6-month Premiums

The highest rate to insure a used 2018 Toyota Camry is $1091, while the lowest rate for the same model is $571, offered by USAA, followed by Nationwide at $673.

Company 2014 2017 2018
Allstate $934 $1066 $1091
Farmers $817 $866 $880
Liberty Mutual $825 $868 $899
Nationwide $686 $685 $673
Progressive $769 $808 $819
State Farm $686 $711 $726
USAA $502 $543 $571

Used Toyota Corolla Average 6-month Premiums

Apart from USAA, the best rates for a six-month-old Toyota Corolla are offered Nationwide.

Company 2014 2017 2018
Allstate $959 $1071 $1117
Farmers $808 $889 $913
Liberty Mutual $806 $873 $877
Nationwide $733 $736 $723
Progressive $726 $756 $765
State Farm $680 $724 $741
USAA $491 $517 $505

How to get car insurance for a used vehicle

It is not necessary to purchase car insurance for a used car before you purchase it. Examining the condition of your used car is essential to figuring out your coverage options. For example, in the case, of an older car, you might need a provider who offers roadside assistance coverage.

One can buy the policy after carrying out thorough research on the quotes and before registering with the DMV. Once the car title has been signed, the insurance can be bought.

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Used Car Buying Tips

Buying a pre-owned car can be a hassle-free experience if you follow the following steps.

  • Inspect the car

Make sure this is done in broad daylight. This will help you look for physical damage. It is equally important to examine the fluid and coolant levels.

  • Look for any sign of leaks

Oil leakage can indicate an unhealthy engine, which might be a sign of a car that might be difficult to maintain in the long run.

  • Check the odometer and the tires

A low odometer reading will give an idea about the usage of the car. New tires and low odometer readings are bad signs.

How do I find the right car insurance?

The type of car you own, along with your insurance needs, must be the priority while shopping around for quotes and zeroing in on your insurance provider. There are certain things that you should keep in mind while considering an insurance provider.

  • Customer Satisfaction

While searching for online quotes, one must always look up company reviews. This will give an idea about customer satisfaction as it is important while paying premiums as well as settling claims.

  • Financial Strength

This must be considered as it will give an idea about the financial stability of the company and its regularity is payouts.

  • Coverage Options

An affordable coverage range and a variety of options according to one's requirements need to be considered. This will make sure you are appropriately covered irrespective of the age of the car you own.

  • Cost

Comparing quotes will make sure you are not overpaying. Moreover, it will help you understand the general trend in car insurance rates for the model you own.

How to get New or Used Car Insurance with Way.com

It is wise to do your research before zeroing in on your insurance provider. Used or new car, comparing the quotes according to your needs might be laborious, but you'll be rewarded with better coverage at a lower price.

Way.com gives you a head start with the analysis of the best car insurance companies nationally, based on criteria that will surely influence your insurance coverage experience, financial strength, customer service, protection, and price.

Auto Insurance Data Methodology

The auto insurance rates published in this guide are based on the results of research completed by Way.com’s data team. Using a mix of public and internal data, we analyzed millions of rate averages across U.S. ZIP codes.

Quotes are typically based on a full coverage policy average unless otherwise noted within the content.

These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes will differ. Given this, it’s important to go through our insurance steps form to find how much you can save with way.com

Frequently Asked Questions

Is it more expensive to insure a new or old car?

Since car insurance is a derivative of different factors, the age of the car becomes one factor in influencing car insurance rates. Newer cars might sometimes be cheaper to insure because of their safety features. However, the rates mostly rely on driving history as well.

Is insurance lower on a used car?

The value of an older car might depreciate with the age of the car. Since it is costlier to repair older cars, the rates can vary with the type of coverage you opt for. However, the collision and comprehensive coverage may be cheaper for a used car.

Do newer cars cost less in insurance?

Even if you keep driving history aside, a brand-new car is subjected to different aspects while calculating car insurance costs. In the case of a new car, the risk of being stolen is high, which spikes the insurance rates. However, the safety features and the crash test ratings can reduce the rates. The deductible and coverage type you opt for can increase the insurance rates of your new car.

What are the two advantages of buying a new car?

If you are considering buying a new car, then you will enjoy lower maintenance costs, better gas mileage, and improved safety features. These will automatically fetch you competitive car insurance rates.

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