Insurance on a new car vs. used car

If you’re deciding between a new and used car, the price may be one of your primary considerations. In that assessment, you should consider the vehicle list prices and the cost to maintain and insure the cars. Let’s break down average insurance policy costs for new and used vehicles. Compare below and decide which best fits your budget.

  1. Which is cheaper to insure: used or new cars?
  2. How does car insurance change for a new vehicle versus used?
  3. How to choose the right vehicle

 

Which is cheaper to insure: a used vehicle or a new car?

Because car insurance is so specific, it’s impossible to give a blanket statement regarding which is cheaper to insure. Your final rate will depend on your driving history, the make and model of the vehicle, the level of coverage, and your insurance company.

While the list price of a new vehicle is usually more expensive than that of a used car, that isn't always the case for insurance. State-of-the-art safety features, more easily replaceable parts, and other factors often contribute to the low cost-to-insure of some new cars. Your insurance premium will depend on the vehicles you're comparing — but to provide a starting point in your search, we gathered insurance data comparing a 2013 Honda Accord with a 2019 Honda Accord (methodology here).

The verdict?The used car was $108 cheaper per six-month policy period to insure than the new model.

 

Company
New vehicle - 6-month premium
Used vehicle - 6-month premium
Allstate
$1,213
$929
Farmers
$933
$953
GEICO
$698
$618
Liberty Mutual
$911
$854
Nationwide
$668
$605
Progressive
$935
$775
State Farm
$723
$655
USAA
$697
$522
Average
$847
$739

 

If you’re set on buying a new vehicle, keep in mind potential premium differences by company. Based on our research, Nationwide and USAA offer the cheapest rates for insuring a new car.

Looking at older model years, it turns out auto insurance rates drop by 3.4% for every year your vehicle ages. An eight-year-old vehicle is approximately 25% cheaper to insure than is a brand new vehicle.

Premiums by Vehicle Age.png

 

For example, a brand new Honda Accord would cost $448 more to insure than an eight-year-old Honda Accord.

 

Compare rates on new and used cars!

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How does car insurance differ for a new vehicle versus a used car?

Vehicles may require different coverage levels — and different levels of expense. If you acquire a new car via a loan or lease, you'll probably be required to carry additional coverage not mandated for a used vehicle. This includes minimum levels of collision and comprehensive coverageas well as gap insurance.

 

Comprehensive and collision coverage

These coverage options provide physical protection for your vehicle in the event of an at-fault accident. Although most states require liability insurance, comprehensive and collision coverages are only mandatory if specifically stated in your lease or loan agreement. If your vehicle is worth more than $4,000, comprehensive and collision are recommended.

 

Gap insurance or loan/lease payoff

Both of these types of coverage options are specific to new vehicles. They both work to cover you if your vehicle is totaled and the payout you receive from your insurance company doesn't cover the original loan of the vehicle. Let’s say you obtained a $20,000 loan for a vehicle that was totaled six months later. Because vehicles depreciate rapidly, you might only receive $17,000 from your insurance company, leaving you on the hook for the $3,000 difference. Gap insurance or lease/loan payoff would help cover the difference.

 


 

Best used car insurance companies

If you do opt to purchase a used vehicle, it's worth doing some research to ensure you find affordable auto insurance coverage. The Zebra's insurance experts surveyed rates from some of America's most popular companies for common used cars, with model years of 2014, 2017, and 2018. While these vehicles and driving profile won’t match yours to a T, the data should function as a jumping-off point in the search for cheap car insurance. 

 

Jump to the average cost of car insurance for these vehicles:

 

USED HONDA ACCORD AVERAGE 6-MONTH PREMIUMS
Company201420172018
Allstate$925$1,053$1,104
Farmers$765$836$871
GEICO$629$720$851
Liberty Mutual$806$872$897
Nationwide$582$590$586
Progressive$775$795$594
State Farm$665$709$744
USAA$486$534$533

 

USED HONDA CIVIC AVERAGE 6-MONTH PREMIUMS
Company201420172018
Allstate$961$1,074$1,115
Farmers$925$1,034$1,067
GEICO$702$796$953
Liberty Mutual$851$910$943
Nationwide$754$734$720
Progressive$728$761$771
State Farm$691$758$777
USAA$494$536$537

 

USED TOYOTA CAMRY AVERAGE 6-MONTH PREMIUMS
Company201420172018
Allstate$928$1,060$1,085
Farmers$811$860$874
GEICO$697$735$749
Liberty Mutual$819$862$893
Nationwide$680$679$667
Progressive$763$802$813
State Farm$680$705$720
USAA$496$537$566

 

USED TOYOTA COROLLA AVERAGE 6-MONTH PREMIUMS
Company201420172018
Allstate$953$1,065$1,111
Farmers$802$883$908
GEICO$703$812$836
Liberty Mutual$800$867$871
Nationwide$727$730$717
Progressive$720$750$759
State Farm$674$718$735
USAA$485$511$499

 

Based on The Zebra's survey, USAA was the cheapest car insurance company for popular used vehicles. If you don't qualify for coverage through USAA, Nationwide is another affordable option for used car insurance.

The 2014 Honda Accord was the cheapest used car to insure, with average rates of $704 for a six-month premium ($117 per month). Remember, these data points are averages and may not match your situation. 

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How to get car insurance for a used vehicle

If a vehicle passes inspection and everything seems in order, the next step is purchasing an auto insurance policy for your used car. If you buy your car from a dealership, the dealer will most likely require proof of insurance prior to your driving the vehicle off the lot. If this is the case, you'll want all the information necessary to get insured as soon as possible in order to get same-day auto insurance.

Here’s what you will need to get auto insurance:

  • Dates of birth of drivers using the vehicle
  • Driver’s license numbers of drivers using the vehicle
  • Garaging address of the vehicle (most likely your home address)
  • Insurance history of drivers using the vehicle
  • Driving record of drivers using the vehicle
  • Vehicle Identification Number (VIN), which will provide the vehicle’s vital information, including make/model

Your VIN is especially important for used vehicle insurance, as it shows the vehicle’s entire history. If the vehicle has been previously totaled and salvaged, this would show up via the VIN. This is another important reason to get your used vehicle inspected prior to purchase. Some auto insurance companies will deny coverage if a vehicle has been salvaged, based on the risk presented by an overhauled vehicle.

 

Should I get car insurance before buying a used car?

Once you find the vehicle you want, you can get a used car insurance quote before purchasing the vehicle by using the VIN. Dealerships often list the VIN on their websites, providing an accurate estimate of your car insurance quote. Most insurance companies will then supply a quote number, which you can use to retrieve the saved quote.

Once you activate the policy, your new insurance company will send the proof of insurance to the dealer and you, and you’ll be able to drive off the lot. 

Factors that insurers use to calculate your auto insurance rate include your age, location, credit score, driving history, marital status, and more. Maintaining a good credit score and a clean driving record free of DUIs, hit-and-runs, and other violations goes a long way toward earning lower insurance rates. 

 

Used car buying tips

Although buyers often overlook this step, it is vital to get a used car inspection before purchasing the vehicle. Most dealers and private sellers will allow you to take the car for an inspection or host a mobile session at their home or dealership. If they don’t allow you to do this, consider it a warning sign, i.e., there’s something the seller doesn't want you to know.

In addition to getting an inspection, you should consider requesting a Carfax report. Using the VIN, a Carfax report can tell you the accident report of the vehicle as well as other important information. 

 

New vs. used car insurance: how to choose the right vehicle

Ultimately, the decision between new and used comes down to personal preference. Research what insurance costs to expect from your vehicle, and take the vehicle's sticker price into consideration. If you’re stuck deciding between a handful of vehicles, use The Zebra to get personalized car insurance quotes for each vehicle. 

 

Additional resources

 

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Ava Lynch LinkedIn

Ava worked in the insurance industry as an agent for four-plus years. Currently providing insights and analysis as one of The Zebra’s resident property insurance experts, Ava has been featured in publications such as U.S. News & World Report, GasBuddy, and Yahoo! Finance.