Do you need insurance before you buy a used car?
Just like when you’re buying a new vehicle, you need insurance before you buy a used car. If you have a car insurance policy already, it will automatically cover your used car — at least for a little while.
Your existing coverage may allow a grace period of anywhere from a few days to a month before you need to formally add your used car to your policy. Each company has its own rules, so double check to see how long you have to add your used car to your policy.
Insurance when buying a used car from a dealer
You need car insurance to buy a used car from a dealer. In fact, you won’t be able to leave the dealership with your new used cart if you don’t have insurance.
If you don’t already have insurance, the dealer may offer you insurance through a partnering company. This might seem convenient, but when you buy used car insurance through a car dealer there’s no guarantee you’re getting the best rates.
Just like with buying a new vehicle, you can shop around for a car insurance policy before you take home your new used car, and set it to start the same day you’re supposed to pick up the car.
Insurance when buying a used car from a private seller
You still need to have car insurance when buying a used car from a private seller even though they probably won’t check to make sure you’re actually insured before letting you drive away.
That’s because car insurance is still a legal and financial necessity. If you get into an accident in your used car and you’re not insured, you’d be on the hook for paying tens of thousands of dollars or more for medical bills and damaged property.
What insurance do you need for used cars?
Nearly everyone who owns a used car will need bodily injury and property damage liability insurance. These two types of liability coverage pay for damage you cause to others in an at-fault crash.
Besides liability insurance, used car owners need to have whatever kinds of car insurance their state requires. But it’s always a good idea to get more than your state minimum car insurance requirements.
Here are some of the other types of car insurance you may need for a used car:
Type of coverage | What does it do? | Who needs it? |
|---|---|---|
Collision coverage | Covers your car when it is damaged in a collision | Drivers who lease or finance their cars, or can’t replace their car out-of-pocket |
Comprehensive coverage | Covers your car when it is damaged by something other than a collision, like by falling objects, vandalism, weather, or animals | Drivers who lease or finance their cars, or can’t replace their car out-of-pocket |
Personal Injury Protection (PIP) | Covers medical expenses for you and your passengers after an accident, regardless of fault | Drivers in no-fault states |
Uninsured/Underinsured motorist coverage (UM/UIM) | Covers damages that were caused by someone without insurance (or enough insurance) | Drivers in states where UM/UIM is required and those who want extra protection |
Roadside assistance | Covers emergency services like towing, tire changings, fuel delivery, and more if you’re stranded | Drivers who want extra protection if they break down on the side of the road |
Gap coverage | Covers the difference between what you still owe on a totaled used car and its depreciated value | Drivers who financed their used car |
Do you need full-coverage insurance on a used car?
Many drivers do need full-coverage insurance for a used car, but you might be able to drop the extra coverage if you:
Own your used car outright and can afford to repair or replace your car yourself
Own a used car that would cost more to insure with full-coverage it would to replace it out of pocket
Own a used car that’s worth less than the comprehensive or collision deductible amount
Just because you own your used car outright doesn’t necessarily mean that you should drop full coverage. You should still consider having both comprehensive and collision coverage for any used vehicle you can’t afford to replace out of pocket to make sure you’re covered for any damage to your car.
That said, car insurance tends to go up every year while the value of cars tends to go down. If you have a used car for many years (or get one that’s more than a few years old), your premiums could go higher than the car’s value.
If you have a loan on your used car, your lender will require that you have full-coverage. This is to protect the value of the car (and the lender’s stake in it).
Used car vs. classic car insurance
A classic, collector, or antique car might technically be a used car, but you wouldn’t insure it the same way you would most used vehicles. Classic and collector cars usually aren’t driven regularly and don’t depreciate in value like normal vehicles, so they require special policies for classic cars, called classic car insurance.
A classic car insurance policy may come with spare parts coverage, inflation protection, and other coverage specifically for classic cars.
When should you get insurance for a used car?
If you don’t already have car insurance, you’ll need to get one before you buy your used car. Let’s say you know the specific used car you’re going to buy. In this scenario, you can ask for the car’s vehicle identification number (VIN), then shop for quotes and set the start date of the policy you buy to the day you plan to take home the used car.
If you’re not sure exactly which used car you’re going to buy, you can still shop for car insurance quotes with as much information as you have currently, and then buy the policy the same day you get the car, once you know the specific vehicle.
Getting car insurance can be done in a few minutes, especially if you’ve done your research ahead of time, so you can do it the same day you complete your used car purchase.
How to get insurance for used cars
You get insurance for used cars just like your would for any vehicle.
If you already have a policy, you can call your insurance company and add the used car to your current coverage. You’ll need basic details about the car’s make, model, license plate number, and your policy number.
If you don’t have car insurance yet, follow these steps to get used car insurance:
Have all information on hand: It will be quicker to get your used car insured if you have the driver’s license numbers of every driver in your household, including yourself, along with details about the car’s make and model.
Choose the right coverage: Make sure that you’re getting the right amount of coverage, but not too much. This means deciding whether or not you need full coverage, but it also means choosing the right endorsements.
Compare quotes before you buy: You should always compare quotes to find the best rates for your used vehicle.
What does used car insurance cost?
The cost of insurance for a used car depends on the make and model, as well as the car’s mileage, its age, the amount of coverage you get, and personal details about you, including your driving history.
Most of the time used cars cost less to insure than new models of the same car.
For example, we found that the cost to insure a used 2017 Toyota Camry with GEICO is $164 cheaper per year than for a new model of the same car.
Amount of coverage | 2017 Toyota Camry | 2023 Toyota Camry |
|---|---|---|
$50,000/$100,000 BI | $928 | $1,092 |
$100,000/$300,000 BI | $961 | $1,124 |
Who has cheap used car insurance?
Some companies have cheaper used car insurance than others. On average, USAA has the cheapest insurance for used cars, but USAA is only available to members of the military and their families.
For people who don’t qualify for USAA, State Farm has the cheapest used car insurance. Since insurance rates can vary from one company to another, make sure to compare quotes to find the cheapest insurance for your used car.
Company name | Monthly cost | Annual cost |
|---|---|---|
USAA* | $87 | $1,044 |
$95 | $1,141 | |
$99 | $1,192 | |
$113 | $1,351 | |
$123 | $1,475 | |
$123 | $1,479 | |
$148 | $1,780 | |
$171 | $2,055 |
Rates are for a 2017 used Toyota Camry
Frequently asked questions
What type of insurance do you need to buy a used car?
Before buying a car, drivers need to have at least the minimum amount of insurance that their state requires. You’ll also have to get full coverage if you used a loan to finance your car.
What happens if you drive a car home without insurance?
Since nearly every state (except New Hampshire and Virginia) requires car insurance, you would face fines, a suspended license, and even possibly jail time if you’re caught driving without insurance.
Is insurance cheaper on new or used cars?
Used cars are usually cheaper to insure than new cars of the same model. That doesn’t mean that used car insurance is always cheap. Some companies offer used car insurance for much higher rates than average.
Methodology
Policygenius found the cost of used car insurance by analyzing car insurance rates from every ZIP code in the country. These rates were provided by Quadrant Information Services for a policy with the following limits:
Bodily injury liability: $50,000 per person, $100,000 per accident
Property damage liability: $50,000 per accident
Uninsured/underinsured motorist: $50,000 per person, $100,000 per accident
Comprehensive: $500 deductible
Collision: $500 deductible
Our sample driver was a 30-year-old male driver with no accidents or violations on his record. Our driver insured a 2017 Toyota Camry. When we also compared the cost of insurance on a used car and a new car, we used the same sample driver. The only differences were that he was from Ohio and drove a 2023 Toyota Camry.
In some cases, additional coverages were added where required by the state or insurer. Some carriers may be represented by affiliates or subsidiaries. Rates provided are a sample of insurance costs. Your actual quotes may differ.
