Insuring a used car

You need insurance on a used car before you drive it away, whether you buy it from a dealer or a private seller. If you already have a policy, it may cover the new-to-you car for a short grace period, but the safest move is to add it the day you buy it. Used cars are often cheaper to insure than new ones because collision and comprehensive pay only up to the car's lower value, while liability costs about the same whatever you drive.

Before you buy: checks that affect your insurance

A used car's history can change what it costs to insure, and whether an insurer will cover it fully. Run these checks with the 17-character VIN before you hand over money:

• Theft, salvage and flood records. The National Insurance Crime Bureau's free VINCheck tells you whether participating insurers have reported the vehicle stolen and not recovered, or as a salvage or flood-damaged vehicle. NICB stresses that it is not a full history report and limits searches to five per day.
• Title history. The National Motor Vehicle Title Information System and paid vehicle history reports show title brands such as salvage, rebuilt or flood. See Run a VIN check before you buy a used car for what each source covers.
• Open recalls. NHTSA's recall search shows unrepaired safety recalls for a specific VIN or license plate.
• Cloned VINs. NICB warns that thieves copy VINs from legitimate cars onto stolen ones of the same model. It suggests checking the VIN with your state motor vehicle agency, running a title search and, if possible, asking your insurer to inspect the vehicle before purchase.
• Working airbags. The Coalition Against Insurance Fraud warns that bogus or missing airbags turn up in used and salvaged cars. The airbag warning light should come on briefly when you start the car, and a mechanic's inspection can confirm the system works.

A car with a salvage or rebuilt title can be harder to insure. Some insurers limit or decline collision and comprehensive on rebuilt vehicles, and the car's lower market value caps any payout. Ask before you buy; salvage and rebuilt titles explained covers the details.

Getting coverage in place

If you already have a policy

Most personal auto policies include a newly acquired vehicle provision. Progressive's used-car guidance says you generally have a grace period of a week to a month to add a used car after buying it, depending on the insurer, and warns that after the grace period lapses you may not be covered. The coverage you get during that window usually mirrors what you already carry: if your current car has only liability, the used car will not automatically have collision or comprehensive. Call your insurer with the VIN on the day of purchase. insuring a new car: what to do before you drive off the lot explains the grace period in more detail.

If you do not have a policy

There is no grace period without a policy. Buy one before you pick up the car. Most insurers can quote and bind coverage the same day with the VIN, year, make and model, and send an ID card by email or app.

Dealer versus private sale

Registration and temporary-permit rules vary by state; the state car insurance requirements lookup shows each state's insurance minimums.

Which coverages make sense on a used car

Liability is required in almost every state and does not get cheaper as the car ages, because it pays for harm you cause others. Older cars do not justify lower liability limits.

Collision and comprehensive pay to repair or replace your car up to its actual cash value, minus your deductible. On a lower-value car, the most you can collect shrinks, and at some point the coverage stops being worth it. The Insurance Information Institute offers a rule of thumb: if your older car is worth less than 10 times the annual premium for these coverages, they may not be cost-effective. If the car is financed, the lender will require them until the loan is paid off; see insurance requirements for a financed car.

Gap coverage matters less on used cars, which have already taken their steepest depreciation, but it can still make sense if you borrowed nearly the full price over a long term. Check whether you would owe more than the car is worth in the first year or two.

Rental reimbursement and roadside assistance are inexpensive add-ons that matter more on an older car you depend on daily.

A worked example

These numbers are hypothetical. You buy a 10-year-old sedan for $7,000 with cash. Collision and comprehensive with a $1,000 deductible would add $650 a year.

• The most the insurer would pay after a total loss is about $6,000 ($7,000 value minus the $1,000 deductible), and the car's value will keep falling.
• The car is worth about 11 times the $650 premium, right around the III's rule-of-thumb line.
• If you could absorb the loss of the car from savings, liability-only coverage may be reasonable. If losing it would leave you unable to get to work, keeping collision and comprehensive, perhaps with a higher deductible, may be worth it.

The Should I drop full coverage? calculator runs this comparison with your own numbers, and state minimum vs full coverage: which do you need? covers the broader choice.

Step by step

1. Run the VIN checks for theft, salvage, title brands and recalls before you commit.
2. Get a quote using the VIN from your current insurer and at least one other, with the coverages you plan to carry.
3. Decide on collision and comprehensive based on the car's value, your savings and any loan requirements.
4. Call your insurer on purchase day to add the car, or buy a new policy before pickup.
5. Carry proof of insurance for the drive home, along with the signed title or bill of sale.
6. Remove or replace the old car on your policy if you sold or traded it in.
7. Check the declarations page to confirm the VIN, coverages and any lienholder.

Key takeaways

• Insure a used car before you drive it away; an existing policy may give a grace period of a week to a month, but only with coverage like what you already carry.
• Run VINCheck, a title history search and NHTSA's recall lookup before buying, and be cautious with salvage or rebuilt titles.
• Liability costs about the same on any car; collision and comprehensive shrink in value as the car ages.
• The III suggests dropping collision and comprehensive when the car is worth less than about 10 times their annual cost, unless a lender requires them.
• Ask your insurer to inspect a car with any doubt about its history.