A Guide to Used-Car Insurance: Cost, Coverage, and More

Buying a used car has its perks — you can typically get a used vehicle cheaper than a new one, and you can save on auto insurance, too. Used-car insurance is similar to buying new-car insurance. You determine your coverage needs, gather and compare quotes, and buy your new policy.

The average cost of car insurance depends on the year, make, and model of your vehicle, so the rate you pay will depend on different factors. For example, a 2015 model averages $170 monthly, while a 2020 model costs $215, based on Compare.com data.

This guide can help you navigate the process of buying used-car insurance from start to finish.

Key Takeaways:

• Liberty Mutual, Mercury, and National General offer some of the cheapest used-auto insurance premiums, coming in between $113 and $116 per month.
• Car insurance rates are usually cheaper for used vehicles — but this depends on the car’s year, make, and model.
• Consider your vehicle’s value when determining your coverage needs, then shop around for insurance quotes to find the cheapest used car insurance.

How Much Does Used-Car Insurance Cost?

The MSRP, parts and labor costs, safety features, trim level, and other factors determine rates for each car make and model. Used cars usually cost less to insure than new ones because they depreciate and are cheaper to repair.

After five years, the average vehicle depreciates around 40%, according to CARFAX. Of course, this depends on the make, model, condition, miles, and other factors.

The following table shows the average car insurance rates for model years 2015 to 2024 based on real Compare.com quotes in 2024.

A brand-new 2024 model averages $226 per month, but a 2019 vehicle only costs around $201 to insure, according to our analysis. If you choose a 2015 model, you’ll save an average of $56 per month on your car insurance policy compared to buying a new model.

Cheapest used-car insurance

Auto insurance rates can vary significantly by insurer. We compared the average rates for used-car insurance from the five cheapest insurance companies in the table below.

Liberty Mutual offers the cheapest used-car insurance, averaging $113 monthly, according to Compare.com data. Mercury costs only $1 more per month, while The General averages $29 more than Liberty Mutual. As you can see, comparing insurance quotes from different companies can help you find the most competitive rates.

How to Get Cheaper Used-Car Insurance

1. Determine your coverage needs. Before shopping for insurance quotes, determine what coverages you need for your used car. If you decide to buy comprehensive and collision insurance, consider how much you can afford to pay if you file a claim. Choosing a higher deductible can help you get cheaper insurance premiums because you take on more risk.
2. Ask about discounts and consider bundling. Ask your insurance agent which discounts are available so you can take advantage of everything you qualify for. Insurers offer multiple discount types, including vehicle-specific, driving history, driver type, policy-related, and occupational. Bundling your home or renters insurance with your auto policy may also offer significant savings.
3. Don’t risk being underinsured to save money. We get it — you’re looking for the cheapest rates, but that doesn’t mean sacrificing coverage for lower premiums. Not having enough liability insurance could put your finances at risk if you cause an accident that exceeds your coverage limits. And if you can’t afford to repair or replace your vehicle, the extra cost of comprehensive or collision insurance may be worth it.
4. Consider your vehicle’s value. If your car gets totaled in an accident, your insurance company will only pay its actual cash value minus your deductible. If your vehicle isn’t worth much, purchasing full-coverage auto insurance might not make sense. If your used car’s value is less than 10 times the comprehensive and collision premium, the coverage might not be worth it, according to the Insurance Information Institute.
5. Shop around for car insurance quotes. Comparing auto insurance quotes from different companies can help you get the lowest rates. Be sure to compare the same coverage types, limits, and deductibles to see which company offers the best deal. Shopping around during each renewal period — or when you have a life change, such as getting married or adding young drivers — can ensure you get the cheapest rate.

Types of Used-Car Insurance Coverage

Knowing the difference between the types of used car insurance coverages can help you determine which ones you need. Below, we explain some of the most popular insurance coverages:

Body injury liability

Bodily injury liability insurance pays for injuries you cause to others when you’re at fault in an auto accident. Almost all states require you to have liability insurance since it pays for the other driver, their passengers, pedestrians, and other not-at-fault parties.

Property damage liability

Property damage liability insurance covers damage you cause to someone else’s property, whether a car, fence, mailbox, utility pole, commercial building, or a house. Property damage coverage is usually combined with bodily injury — most states also require this coverage.

Collision insurance

Collision insurance pays for your damage when your vehicle collides with another car or object, like a guardrail, or if you’re in a single-vehicle rollover accident. Collision coverage is optional, but if you get a used-car loan, your lender will probably require you to have it.

Comprehensive insurance

Comprehensive insurance pays for your vehicle’s damages that collision doesn’t cover, like vandalism, theft, broken glass, hitting an animal, and weather events. It’s also optional unless your lender requires it. Unlike liability insurance, comprehensive and collision usually have a deductible that you pay before your insurer pays its portion.

Gap coverage

Gap insurance is another optional coverage you can add to your insurance policy if you finance your used car. It pays the difference between the actual cash value of your car and your loan amount if your vehicle is totaled. For instance, if you owe $10,000 but the totaled vehicle’s value is $8,000, gap insurance pays the other $2,000.

How Much Used-Car Insurance Do You Need?

How much used-car insurance you need depends on your vehicle’s value and your personal risk threshold. For instance, you might not need full-coverage insurance if you can afford to pay for repairs or buy another car if yours is totaled. And if you pay cash when you buy it, you won’t need gap insurance.

Consider buying at least the minimum coverage your state requires and as much liability coverage as you can afford to protect your financial assets. If you don’t have health insurance, consider medical payment coverage or personal injury protection (PIP).

Grace Period After Buying a Used Car

If you buy your car from a dealership, you have to provide proof of insurance before driving it off the lot. You won’t need proof of insurance if you buy from a private seller, though you’ll have to insure the vehicle before you drive it.

Most insurers offer a grace period of up to 30 days to add a new vehicle to an existing car insurance policy. If you don’t have an existing insurance policy, you must buy coverage before registering the vehicle with your state’s DMV. It’s a good idea to find out what grace period your car insurance company offers before you buy a car.

Used Car Insurance FAQs

Shopping around and comparing auto insurance quotes is one of the best ways to get a good deal on used car insurance. We answered some of the most common questions about used auto insurance to help you find the right coverage.

Is it cheaper to insure a used car?

It can be cheaper to insure a used car, but it depends on the year, make, and model of your vehicle, plus personal factors, like your age, driving record, and ZIP code. If you don’t need full-coverage car insurance, you can get lower rates with a liability-only policy. However, you might need a full-coverage policy if you finance or lease your used motor vehicle.

What’s the best used car insurance?

There’s not one best used-car insurance company for all drivers, since many factors go into pricing auto insurance. Determining your coverage needs and comparing insurance quotes from multiple companies can help you find the most affordable rates.

Evaluating factors like the insurer’s financial strength and customer and claims satisfaction scores with independent third parties like J.D. Power can help you narrow down the best car insurance company.

Can you transfer an existing insurance policy to a new car?

Yes. You can transfer your existing insurance policy to a new car (even if it’s a used vehicle). Call your insurer for an updated quote. Provide the agent with the new car details — the year, make, model, VIN, and odometer reading — and they can replace your previous car with the current one. Be sure you understand the company’s grace period when transferring to avoid a lapse in insurance.

Methodology

Data scientists at Compare.com analyzed more than 50 million real-time auto insurance rates from more than 75 partner insurance providers in order to compile the quotes and statistics seen in this article. Compare.com’s auto insurance data includes coverage analysis and details on drivers’ vehicles, driving records, insurance histories, and demographic information.

All the quotes listed in this article have been gathered from a combination of real Compare.com quotes and external insurance rate data gathered in collaboration with Quadrant Information Services. Compare.com uses these observations to provide drivers with insight into how auto insurance companies determine their premiums.

Sources:

1. CARFAX, “Car Depreciation: How Much Value Does A Car Lose Per Year?,” Accessed September 19, 2023.
2. Insurance Information Institute, “How to save money on car insurance,” Accessed September 20, 2023.