Buying a used car can be a great way to save money, but that savings can dry up quickly if you get into an accident without the right used car insurance.

To avoid being underinsured—or buying unnecessary insurance—it’s good to know how used car insurance works, what it costs and which companies have the cheapest used car insurance.

 

What Is Used Car Insurance?

Used car insurance is a contract between you and an auto insurance company that outlines coverage for a car that isn’t new. The car insurance policy will specify when you’ll receive financial compensation if you file a claim.

If you don’t pay your car insurance bill, coverage lapses and any claims you make for the unpaid period will be denied.

The best car insurance for a used car will combine coverage that fits your needs at a price you can afford.

How Much Is Insurance On A Used Car?

Used car insurance costs an average of $1,391 a year, or $116 a month, based on Forbes Advisor’s analysis of rates for popular 2013 model vehicles.

The Honda CR-V, Ford F-150 and Chevrolet Silverado 1500 are the cheapest used cars to insure among those evaluated in our analysis. The Nissan Altima, GMC Sierra 1500 and Honda Civic are the most expensive for insurance.

Vehicle 2013 model average car insurance cost per year
Honda CR-V
$1,241
Ford F-150
$1,249
Chevrolet Silverado 1500
$1,270
Toyota RAV4
$1,315
Chevrolet Equinox
$1,319
Ford Explorer
$1,361
Jeep Grand Cherokee Laredo
$1,366
Ram 1500
$1,386
Nissan Rogue
$1,402
Honda Accord
$1,429
Toyota Camry
$1,437
Toyota Corolla
$1,442
Honda Civic
$1,483
GMC Sierra 1500
$1,531
Nissan Altima
$1,643
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100 ($100,000 for injuries per person, $300,000 for injuries per accident, $100,000 for property damage), uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40.

Used Car Insurance Costs By State

Florida has the most expensive average auto insurance for used vehicles ($3,253 a year), followed by Louisiana ($3,042 a year) and New Jersey ($2,426 a year).

Vermont, Idaho and New Hampshire are the cheapest states for used car insurance.

State Average annual used car insurance cost Average monthly used car insurance cost
$1,581
$132
$1,400
$117
$1,755
$146.00
$1,658
$138.00
$2,207
$184.00
$1,990
$166
$1,968
$164
$2,279
$190
$3,253
$271
$1,835
$153
$1,136
$95
$936
$78
$1,515
$126
$1,171
$98
$1,089
$91
$1,571
$131
$2,054
$171
$3,042
$254
$997
$83
$1,907
$159
$1,379
$115
$2,302
$192
$1,473
$123
$1,465
$122
$1,836
$153
$1,549
$129
$1,282
$107
$2,139
$178
$948
$79
$2,426
$202
$1,572
$131
$2,281
$190
$1,168
$97
$1,022
$85
$1,189
$99
$1,825
$152
$1,429
$119
$1,712
$143
$1,578
$132
$1,331
$111
$1,894
$158
$1,348
$112
$1,897
$158
$1,486
$124
$893
$74
$1,315
$110
$1,465
$122
$1,334
$111
$1,268
$106
$1,194
$100
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100, uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40. Rates reflect averages for 30 vehicles in the 2013 model year.

Are Used Cars Cheaper To Insure?

Used cars are 37% cheaper to insure than new cars, on average, based on Forbes Advisor’s analysis of full coverage car insurance. The average annual car insurance cost for used cars is $1,391 a year, which is $527 less than the average cost for new cars ($1,918 a year).

Used cars are generally cheaper for collision and comprehensive insurance because they have a lower value. If the car is damaged or totaled in an accident, the insurance company pays out less money than it would for a totaled new car.

If you’re buying liability-only car insurance, there may not be much difference in insurance costs between a new and used vehicle. Liability-only car insurance pays for damage you cause to others—so the age of your vehicle carries less importance because there’s no payout for your own vehicle.

Average Used Car Insurance vs. New Car Insurance Costs

Vehicle 2013 model average car insurance cost per year 2023 model average car insurance cost per year $ difference more for 2023 model % difference more for 2023 model
Chevrolet Equinox
$1,319
$1,770
451€
33%
Chevrolet Silverado 1500
$1,270
$1,865
$595
45%
Ford Explorer
$1,361
$1,885.00
$524
36%
Ford F-150
$1,249
$1,766.00
 517
41%
GMC Sierra 1500
$1,531
$2,128.00
$597
38%
Honda Accord
$1,429
$1,981
$552
37%
Honda Civic
$1,483
$1,980
$496
32%
Honda CR-V
$1,241
$1,712
$471
37%
Jeep Grand Cherokee Laredo
$1,366
$1,981
$615
43%
Nissan Altima
$1,643
$2,168
 525
31%
Nissan Rogue
$1,402
$1,857
$455
31%
Ram 1500
$1,386
$1,969
 584
40%
Toyota Camry
$1,437
$1,962
$525
35%
Toyota Corolla
$1,442
$2,015
$573
39%
Toyota RAV4
$1,315
$1,738
$423
31%
Averages
$1,391
$1,918
$527
37%
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100, uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40. Rates reflect averages for 30 vehicles.

How To Get Cheap Insurance On a Used Car

Following these tips can help you lock in affordable insurance for a used car:

  • Consider what types of coverage you need. If your car is old and has a low value, you may want to drop collision or comprehensive coverage. If your car is totaled, the insurance payout will be low, and it may not be worth the premiums you’re paying.
  • Increase your deductible. Raising your comprehensive and collision deductible may net you savings. The higher the deductible, the less  the insurance company pays out for a collision or comprehensive insurance claim. You can save between 7% to 28% a year on average by hiking your deductible, according to Forbes Advisor’s analysis of how much you can save by increasing your car insurance deductible.
  • Look for discounts. Car insurance discounts can lower your costs. For example, you may be eligible for a safe driver discount or a multi-policy discount if you have other insurance policies with the same company.
  • Check out specialty insurance if you have a classic or antique car. These cars may have a higher value and require specialized coverage, so it’s smart to research companies that offer classic car insurance.
  • Compare quotes. To find the most affordable coverage, shop around and compare car insurance quotes from multiple car insurance companies.

Cheapest Used Car Insurance Companies

Erie is the cheapest used car insurance company among those we analyzed—$560 less per year than the overall average ($1,391 a year). Travelers used car insurance is $458 a year cheaper than the average.

The cheapest used car insurance companies we evaluated all have average annual rates below $1,220.

Company Average cost per year for used car insurance
$831
$933
$1,200
$1,202
$1,219
Source: Quadrant Information Services. Rates are based on liability insurance of 100/300/100, uninsured motorist coverage, and collision and comprehensive insurance with a $500 deductible. Averages are for a female driver age 40. Rates reflect averages for 30 vehicles.
*USAA is open only to members of the military, veterans and their families.

Types of Used Car Insurance Coverage

While the best car insurance for a used car depends on your needs and budget, you will need at least the minimum car insurance required in your state to drive legally. Optional coverage types are available that provide financial protection if your car is stolen, damaged or totaled.

  • Liability insurance: At the very least, most states require you to buy liability car insurance. It pays for damages to other people and property if you’re at fault in an accident.
  • Collision insurance: This type of coverage pays to fix or replace your car if you’re in an accident, regardless of fault. Collision insurance is typically required if you finance your vehicle.
  • Comprehensive insurance. Comprehensive coverage pays for theft and damages to your car that aren’t related to an accident, such as fire, vandalism and weather damage. If you live in an area with a high risk of these types of incidents, comprehensive insurance may be a good option. It’s also usually required if you finance your car.
  • Personal injury protection. This type of car insurance covers medical expenses and lost wages if you or your passengers are injured in an accident, no matter who was at fault. Personal injury protection is required in some states and optional in others.
  • Uninsured motorist coverage. Uninsured motorist coverage pays for injuries to you and your passengers caused by a driver who does not have insurance. It’s required in some states.
  • Rental reimbursement insurance. If your car is in the repair shop due to an accident covered by insurance, rental reimbursement insurance will help pay for a rental car.
  • Roadside assistance insurance could be a good bet if you’re worried about breaking down on the side of the road.

Full Coverage Car Insurance for a Used Car

Full coverage car insurance is a combination of liability, collision and comprehensive insurance. It provides broad coverage for a car.

You will typically be required to buy full coverage car insurance if you finance or lease your car. Otherwise, whether you should get full coverage for a used car will primarily depend on your car’s value and your financial situation.

If your used car has a high value, full coverage car insurance might be a good fit. It can reimburse you if you have an accident, if your car is stolen or if it’s damaged by non-crash events, such as fire, hail or flooding. You can find an estimate of your used car’s value at sites such as Edmunds.

Also consider your financial situation. If you can’t comfortably afford to fix or replace your car in case of damage, full coverage car insurance can be a good option. Check quotes from the cheapest full coverage car insurance companies.

If your car’s value is relatively low, the cost of full coverage car insurance may not make sense and liability-only car insurance might suit your needs. That’s because the maximum payout for comprehensive and collision insurance is the value of your car before it was totaled or stolen, minus the deductible. If your used car has a low value, an insurance payout will be low.

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Gap Insurance On a Used Car

Gap insurance covers the difference between what you owe on your car loan or lease and the actual cash value of your vehicle if it is stolen or totaled in an accident covered by your policy. It can be especially useful if you owe a lot more on your used car than it’s worth.

The depreciation rate for used cars is typically slower than new cars, so the gap between the loan amount and the car’s value may not be significant. You don’t need gap insurance if your loan balance is less than the actual cash value of your car. Some car insurance companies only sell gap insurance if the vehicle is less than three years old. 

If your vehicle qualifies, gap insurance may make sense in certain scenarios, such as:

  • Long loan terms. If you have a 60- or 72-month loan, your used car’s value may depreciate faster than you can pay off your loan, which can result in a potential gap.
  • Low down payment. If you made a very small down payment for your used car, the gap between the loan amount and the car’s value may be large enough to warrant gap insurance.
  • Limited savings. Even if the gap between your loan balance and your used car’s value is very small, gap insurance can provide peace of mind if you can’t afford to pay it. And,  it’s relatively affordable—gap insurance adds an average of $60 a year to your car insurance costs, based on Forbes Advisor’s analysis.
  • You drive a lot of miles. If you have a long commute or log a lot of hours behind the wheel, gap insurance might make sense. That’s because a car’s value goes down as the mileage goes up.
  • You have a high-interest loan. If you financed your car at a high-interest rate, the gap between the loan amount and the car’s value may be substantial enough that gap insurance makes sense.

Many car insurance companies offer gap insurance, such as:

How To Get Insurance When Buying a Used Car

Some car insurance company websites offer quotes, and it’s also good to contact an independent insurance agent, who can provide quotes from multiple companies.

Compare car insurance quotes for the vehicles you’re thinking of buying before you close the deal. You’ll need coverage on the car before you drive it away. If you are adding  a car to your household, you’ll need to contact your insurer to arrange for coverage before you buy the car.

If you already have car insurance and are replacing a vehicle, your current coverage may extend to the used car for 30 days, giving you time to contact your insurer.