Auto Insurance Rates: New Vs Used Cars

When you are shopping for a new or used car, cost is sure to factor in as you weigh your options. When you’re considering whether to purchase either a new or used vehicle, you may also want to think about the cost of car insurance. The age of the car you are purchasing can have an impact on the auto insurance rates you’ll end up paying. Before you decide on your final purchase, learn the difference between insuring a new or used car.

Auto Insurance Rates on New Cars

You might expect that new cars would be more expensive to insure, as they have high market value and can require costlier repairs in the result of an accident.

While the relationship between a newer, more expensive car and higher insurance rates is true in most cases, certain factors drive down insurance rates, including advanced safety features, which lessen the likelihood of a crash.

It is also important to consider what coverages you may be required to carry before finalizing a purchase. If your new car has a loan or lease, insurance requirements might include comprehensive and collision coverage. This is often required by lenders to pay for damages to the vehicle should you cause an accident.

The Benefit of Gap Coverage

If you have a loan or a lease on a new car, you can benefit from purchasing gap coverage. This will raise your premium price, but can save you from financial disaster if your new car gets totaled.

Essentially, gap coverage protects you from paying the balance between your car’s actual cash value and how much you still owe on your loan. For example, you purchase your car for $20,000 and get in an accident after 1 year of ownership. Your new car is totaled, but you still owe $16,000 on your auto loan. After submitting the claim, your insurer estimates the car’s actual cash value is $10,000 and will reimburse you that amount.

With gap coverage, your insurance provider would cover the remaining $6,000.

Without gap coverage, you would be left paying the remaining $6,000 difference out of your own pocket.

Auto Insurance Rates on Used Cars

The more likely your car is to be stolen, the higher your car insurance rates; this means that you may actually pay more for car insurance if you purchase an older vehicle with a high theft rate.

Newer cars may seem more desirable, but are actually targeted for theft far less often. This is because they are often equipped with anti-theft devices and GPS tracking. Older cars are more likely to be targeted as they can be disassembled and parted out more easily.

The National Insurance Crime Bureau (NICB) reports that 7 of the top 10 most stolen vehicles in 2012 were models dating from 1991 to 1999.

If you decide to buy a used car, check the vehicle identification number and be wary if the car has ever been salvaged. Once you purchase used, be sure to review your coverage options to best fit your needs.

Deciding on Necessary Car Insurance

You can save money when insuring an old car by ensuring you only purchase the car insurance coverage you need. While you are likely required by your state law to purchase liability insurance (which pays for injuries and damages to others), you may wish to opt out of some of the extra coverages that offer additional protection.

For example, comprehensive coverage pays for damages caused by incidents not related to accidents, such as theft or fire. Collision insurance pays for damage from striking an object or another car.

Since the maximum payout you can get from comprehensive and collision insurance is the value of your car, purchasing these options might not be worth the cost. Remember that if you have a loan or lease, you might need these types of insurance.

Choosing the Right Insurance Coverage

Whether you’ve purchased a new or used car, it’s always a good idea to comparison-shop for the best rates. Let us do the comparing for you! Just call us at 724-929-2300 and we can get an accurate quote from multiple insurance companies before you buy. This ensures you get the best price on the right coverage for you, saving you more money and time. Regardless of your vehicle type or age, make sure to get adequate coverage that fits your needs and budget.

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