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Professor of Risk Management
25+ years in insurance
Former commercial lines underwriter
Updated
Insuring a used car typically costs less than insuring a new one because older vehicles have lower market values. That means insurance companies face less risk when covering collision and comprehensive damage.[1] But you’ll still need to meet your state’s minimum requirements and any lender requirements.[2]
If you’re looking to save money while protecting yourself from major losses, understanding your insurance options is important. Here’s what you need to know about used car insurance costs, coverage options, and ways to reduce your premium without sacrificing essential protection.
Lenders require full coverage on used cars, but you can drop collision and comprehensive once your vehicle is paid off.
Most insurance companies offer a seven- to 30-day grace period to add a newly purchased used car to your existing policy.
Increasing your deductible for collision and comprehensive coverage can significantly reduce your monthly premium without sacrificing protection.
Used car insurance is simply standard auto insurance on a pre-owned car. It’s not a special product with different features. You’ll work with the same insurance companies and choose from the same core coverages, including liability, collision, and comprehensive protection.
What changes is the cost and how much coverage makes sense for your situation. Used vehicles typically have lower market values than new cars, which often makes them cheaper to insure. The coverage choices that work best may be different from what you’d select for a brand-new vehicle.
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Insuring a used car is usually cheaper than insuring a new one. But your actual insurance rates depend on more factors than just your vehicle’s value. Insurers also consider factors like your driving record, location, credit history, and deductible amounts.
Older, lower-value cars often have the cheapest rates because they cost less to repair or replace, which lowers the cost of full coverage. But liability-only policies may not get much cheaper just because a car is older, especially if insurers expect the vehicle model to cause more damage in a collision. The table below shows average monthly premiums for used car insurance by state, according to Compare.com data.
State  | Average Monthly Premium |
|---|---|
| United States | $117 |
| Alaska | $83 |
| Alabama | $85 |
| Arkansas | $97 |
| Arizona | $108 |
| California | $122 |
| Colorado | $121 |
| Connecticut | $170 |
| Delaware | $160 |
| Florida | $155 |
| Georgia | $173 |
| Hawaii | $72 |
| Iowa | $63 |
| Idaho | $69 |
| Illinois | $98 |
| Indiana | $83 |
| Kansas | $92 |
| Kentucky | $128 |
| Louisiana | $123 |
| Massachusetts | $110 |
| Maryland | $191 |
| Maine | $93 |
| Michigan | $148 |
| Minnesota | $105 |
| Missouri | $111 |
| Mississippi | $86 |
| Montana | $80 |
| North Carolina | $68 |
| North Dakota | $74 |
| Nebraska | $86 |
| New Hampshire | $58 |
| New Jersey | $189 |
| New Mexico | $83 |
| Nevada | $168 |
| New York | $148 |
| Ohio | $80 |
| Oklahoma | $104 |
| Oregon | $98 |
| Pennsylvania | $102 |
| Rhode Island | $155 |
| South Carolina | $167 |
| South Dakota | $84 |
| Tennessee | $85 |
| Texas | $141 |
| Utah | $102 |
| Virginia | $122 |
| Vermont | $82 |
| Washington, D.C. | $220 |
| Washington | $110 |
| Wisconsin | $73 |
| West Virginia | $94 |
| Wyoming | $67 |
Multiple factors influence what you’ll pay for insurance coverage on a used car. Understanding them can help you estimate your insurance premium and identify ways to save.
Vehicle age: Older cars typically cost less to insure, but very old vehicles may lack modern safety features that could qualify you for insurance discounts.
Safety features: Features like driver assistance systems can reduce your insurance costs.
Mileage: The more time you spend on the road, the more likely you are to get in an accident and file a claim.
Prior damage: A car with a rebuilt title may cost more to insure.
Driver age: Younger drivers pay more regardless of car type, and older drivers may also see increases.
Driver record: Accidents, tickets, and claims history significantly affect your car insurance rates.
Driver credit: In states where it’s allowed, poor credit can increase your insurance premiums.
Garaging location: Urban areas with more accidents and theft have higher rates than rural locations.
Coverage limits and deductibles: Higher limits and lower deductibles increase your premium.
It can be helpful to use a car insurance calculator to see actual numbers for your specific situation and compare coverage options.
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The price difference between insuring used and new vehicles becomes clear when you compare quotes side by side. The table below shows how average monthly costs differ between used cars and new cars across the cheapest insurance companies, according to Compare.com data.
Company | Average Monthly Premium: Used Cars | Average Monthly Cost: New Cars |
|---|---|---|
| USAA | $65 | $97 |
| State Farm | $70 | $103 |
| Erie | $85 | $126 |
| Allstate | $93 | $137 |
| GEICO | $99 | $146 |
| American Family | $99 | $147 |
| Root | $103 | $152 |
| Direct Auto | $107 | $159 |
| Mercury | $110 | $163 |
| Nationwide | $119 | $176 |
| Travelers | $122 | $181 |
| Farmers | $138 | $204 |
| CSAA | $139 | $205 |
| Liberty Mutual | $154 | $228 |
You need to have at least your state’s minimum required liability coverage, whether you drive a used or new vehicle. But minimum limits for property damage and bodily injury liability are often quite low and might not provide enough financial protection if you cause a serious accident.[3]
Liability coverage is important, but it isn’t the only coverage to consider. Other common options include collision insurance, comprehensive coverage, uninsured/underinsured motorist, and personal injury protection (PIP) or medical payments coverage. The right mix depends on your vehicle’s value, whether you have a loan or a lease, and your personal risk tolerance.
If you’re looking to save money, prioritize higher liability limits to protect yourself. You may be able to skip optional coverages like collision and comprehensive if you drive an older, paid-off vehicle with little market value.[4] [5] [6]
Coverage Type | Required | Not Required |
|---|---|---|
| Liability coverage | In all states except New Hampshire. | In New Hampshire. Must show financial responsibility. |
| Collision coverage | Lenders/leasing companies may require. | No state-level requirement. |
| Comprehensive coverage | Lenders/leasing companies may require. | No state-level requirement. |
| Uninsured/underinsured motorist coverage | In 20 states and Washington, D.C.: Connecticut, Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Jersey, New York, North Carolina, North Dakota, Oregon, South Carolina, South Dakota, Vermont, West Virginia, Wisconsin | In all other states. |
| Personal injury protection | In 12 states with no-fault insurance laws: Delaware, Florida, Hawaii, Kansas, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Oregon, Utah | In states with at-fault insurance laws. |
| Medical payments coverage | In Maine, New Hampshire (if you maintain coverage), and Pennsylvania | In all other states |
State laws don’t differentiate between new and used cars. Minimum insurance requirements apply to all vehicles registered in the state, regardless of age or value. Forty-nine states and Washington, D.C., require bodily injury liability and property damage liability coverage to legally drive.
Some states operate under no-fault insurance systems, where each driver’s own insurance company pays for their medical expenses regardless of who caused the accident. These states require PIP as part of your car insurance policy.
To find your specific state’s requirements, check your state’s department of insurance website.
While states don’t require full coverage, lenders and leasing companies typically do, regardless of whether the vehicle is new or used. Full coverage typically includes liability, collision, and comprehensive protection. These coverages insure against damage from accidents, theft, vandalism, weather, and animal strikes.
It may make sense to drop full coverage once you’ve paid off the loan on your used vehicle. If your car has lost a lot of value, you likely don’t need full coverage. Consider dropping collision and comprehensive if:
Your car’s value is less than 10 times your policy premium.
You have savings to replace the car out of pocket.
Maintenance and repair costs are mounting on an older, high-mileage vehicle.
Save up to $867 per year on coverage.
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You can still reduce your car insurance costs without leaving yourself vulnerable to financial disaster after an accident. The key is adjusting your coverage thoughtfully and comparison shopping for lower rates and better discounts.
But don’t cut coverage across the board just to save money. Dropping your liability limits to state minimums puts your personal assets at risk if you cause a serious accident, even if you drive an inexpensive used vehicle. Instead, focus on these strategies:
Compare car insurance quotes from multiple insurers. Rates vary dramatically between companies for the same coverage, so it’s worth getting at least three to five quotes.
Raise your deductible amounts. Increasing collision and comprehensive deductibles can significantly reduce premiums. But make sure you can afford to pay the higher out-of-pocket costs.
Ask about discounts. Many insurance companies offer various discounts for safe driving, bundling policies, and certain vehicle safety features.
Drop unnecessary coverage. Remove collision and comprehensive coverage on low-value vehicles you could afford to replace.
Improve your credit. In states where insurers can use credit information, having good credit can help lower your premiums.
You need insurance for a used car as soon as you purchase it, whether you’re buying from a dealer or a private seller.[2] Most insurance companies offer a grace period that automatically extends your existing policy’s coverage to a newly purchased vehicle. These grace periods typically last seven to 30 days, giving you time to formally add the car to your policy.
Dealers often require proof of insurance before they’ll release a car to you because they want confirmation you can legally drive it off the lot. When you buy from a dealership, contact your insurance company before completing the purchase. That way, you can confirm your existing policy will cover the vehicle during the grace period.
Shopping for used car insurance often raises questions about costs, coverage, and timing. Here are answers to some of the questions used-car owners ask most often.
USAA offers the cheapest coverage for a used car with an average rate of $65 per month, according to Compare.com data. But no single insurance company offers the cheapest rates for all used car owners. Instead, prices vary based on your specific profile, location, driving record, and vehicle. Compare quotes from multiple insurers to find your best rate.
Yes, used cars typically cost less to insure than new cars because they have lower market values.
The best insurance coverage for a used car depends on its value and your financial situation. At a minimum, carry the coverages required by your state and lender. Then, if you can afford it, try to get your liability levels well above your state’s minimum requirements and consider other coverages you’d like to add.
Yes, you can insure a used vehicle purchased from a private seller the same way you would from a dealer. Contact your insurance company to add it before taking possession to ensure continuous coverage.
Grace periods automatically extend your existing coverage to a newly purchased used vehicle for seven to 30 days, depending on your insurer. You must add the vehicle to your policy within that time frame to maintain coverage.
For basic liability coverage, the cheapest model to insure is the Honda FIT, with owners paying an average monthly premium of $63, according to Compare.com data.
Data scientists at Compare.com analyzed more than 50 million real-time auto insurance quotes from more than 75 partner insurers in order to compile the rates 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 rates listed in this article have been collected 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 readers with insights into how auto insurance companies determine their premiums.
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Professor of Risk Management
25+ years in insurance
Former commercial lines underwriter
At Compare.com, it’s our mission to give you the tools to find the best (and most affordable) insurance for your unique needs and budget. We strive to provide information that’s helpful, clear, and unbiased, and we believe that comparing insurance companies should never put you at risk of spam. Our editorial team — which is made up of experienced writers, editors, insurance agents, and data analysts — has spent thousands of hours researching and creating the coverage overviews, side-by-side comparisons, and detailed reviews you see across our site.
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