Car insurance is not just a necessity for brand new vehicles; drivers need protection for their used cars as well. There is no set process for how to find the best insurance for a used car, but there are factors to consider when weighing your options for coverage. Ultimately, the best used car insurance is the coverage that provides the most protection at the best price. Here’s an overview of the required insurance needed by your state, additional insurance you could get, discounts, and other factors that affect your insurance rate.
Required used car insurance
All states require used car drivers to carry liability insurance. This minimum coverage mandated by law applies in accidents where you are at fault. Liability insurance reimburses the other driver for repairs and medical bills. This ultra-basic policy does not, however, reimburse you for any medical treatment or repairs to your own vehicle.
In some states, the law stipulates drivers also carry uninsured and underinsured motorist coverage. This additional car insurance is used when you are involved in an accident that is not your fault and the other driver does not have sufficient insurance to pay you for needed repairs or medical bills.
Check the specific minimum requirements for used car insurance in your state.
Additional insurance for used vehicles
You may want coverage beyond the state minimums. If there is a loan on your used car, additional coverage is likely required by the lienholder. In such a case, you can add collision and/or comprehensive coverage to your used car insurance policy.
Collision coverage pays for repairs to your car whether you or the other driver is at fault while comprehensive coverage pays for repairs to your vehicle caused by non-collision incidents, such as vandalism, theft, or damage from natural disasters.
This extra coverage costs a little more, but the extra protection and peace of mind may be worth it. When collision or comprehensive coverage is not required, take the extra time to analyze if the rewards are worth the costs. For instance, it makes no sense to insure your car for more than it is worth. You can check your used car’s value at Kelley Blue Book, and definitely opt out of this additional coverage if your used car is worth less than your insurance deductible.
Ask about discounts for used car insurance
It never hurts to inquire about discounts because many insurance agents will not tell you about ways you can save money of their own accord. This is the time to be proactive - the worst thing that can happen is to learn you don’t qualify for any discounts. If you have a good driving record with no moving violations or accidents in the past five years, you are likely a candidate for a discount. Other types of discounts are available for college students or senior citizens.
Other factors for best insurance rates
Your driving record is not the only record that influences the insurance rates you are offered. Your credit record, or score, can also play a large role. In fact, most used car insurance providers calculate premium rates based on credit-based insurance scores.
This means that drivers who pay bills on time and have lower debt-to-income ratios are more likely to secure a good car insurance rate, and drivers with not-so-stellar credit must pay more for the same degree of coverage. So, it is in your best interest on multiple levels to repair your credit if it is low, so your insurance rates can become lower down the road.
It is not always easy to find the best used car insurance for your budget and needs. It is a process that requires weighing the risks and benefits before making tough decisions.