How to Insure a Used Car
The process of purchasing auto insurance for a used car is the same as the purchasing process for a new car. You first need to determine how much coverage you need. Then, you can go about soliciting auto insurance quotes from different insurance companies and comparing them. Next, you have to choose a reputable insurer to purchase your policy from. Finally, you need to review your policy and sign it.
Determining how much auto insurance coverage you need can be one of the more difficult parts of insuring a used car. The value of the car will influence how much coverage you need to buy. In every state, a minimum amount of liability insurance is required for all drivers regardless of the value of the car. Liability insurance covers bodily injuries and property damage resulting from an accident in which you are at fault. In most cases, the mandatory legal minimum is insufficient to cover the costs of a serious accident, so it is recommended that you purchase more than is required. Other types of coverage such as medical payments and uninsured/underinsured motorist coverage may be required or may be optional. Collision and comprehensive coverage is almost always optional and is directly affected by the value of the car.
Collision and comprehensive auto insurance covers damage to your car from an accident or other incidents such as theft or fire. If your used car is not worth very much, it may not make good financial sense to pay a premium for this coverage. This is particularly true if you choose a high deductible for your insurance. If your car is damaged or totaled, you will only get what the car is actually worth at most. Because depreciation is factored in, that could be very little. You can save on your premiums by skipping this coverage entirely if you choose.
Once you determine how much auto insurance coverage you actually need, you should start shopping around between companies. You’ll likely find a lot of variety in the quotes you get, but it’s important to always compare apples to apples. Research the insurers you are considering to make sure that they have good reliability records. If you choose an insurer based only on price, you may run into problems when it’s time to file a claim. There are several resources you can use to research an insurance company including the Better Business Bureau, A.M. Best and Standard & Poor’s. Once you choose an insurer and a level of coverage you feel comfortable with, take the time to read your policy carefully before signing it.
If you are buying a used car, it’s a good idea to talk to your insurance company or get a few quotes from different insurers before you close the deal. The type of used car you buy will have an effect on how much you pay in insurance premiums because potential repair costs, risk of theft and safety records are all taken into consideration. Consequently, there could be a significant difference in the cost to insure two very similar cars.
If you already have an auto insurance policy, be sure to cancel that policy in writing after you have secured new insurance. While you don’t want to pay for two insurance policies on one car, you could be charged a penalty by the state if you have a gap between insurance policies.