Do You Need Insurance for a Used Car?
This year’s spike in car prices has many buyers showing an interest in used cars as an alternative.
New car prices have soared in 2021, with many automakers forced to cut production due to a global shortage of microchips. The tight supply of new cars has led some to turn to used cars, which have also seen significant price increases. The average cost of a used car reached $26,000 in September, a 13% increase from the same time in 2020.1
Even with the recent price increases, a quality used car still offers potential cost savings over a comparable new vehicle. If you’re thinking of buying used, you may be wondering whether you’ll need to insure your purchase.
The short answer is “yes.”
Let’s take a look at why insurance is just as necessary for a used car as it is for a brand new set of wheels. We’ll also offer tips on insuring a newly-purchased used car.
Why Should You Buy Insurance for a Used Car?
Used cars have the same state-required minimums for liability coverage as new cars. In fact, you’ll need to show proof of insurance before you can drive the vehicle off the lot.
State-Required Liability Insurance
Liability protects you from two types of damages incurred when you are found to be at fault in an accident. Bodily injury coverage pays for medical bills to injured persons, and property damage covers repairs to vehicles and personal property belonging to other persons. Missouri car insurance requirements follow a 25/50/25 formula.2
- $25,000 for bodily injury per person
- $50,000 for bodily injury per accident
- $25,000 property damage per accident
You must also purchase uninsured/underinsured motorist coverage of $25,000 per person for bodily injury and $50,000 bodily injury per accident.
Do I need Full Coverage Insurance on a Used Car?
If you’re financing the vehicle, your lender will want you to carry full coverage, which includes liability plus collision and comprehensive insurance.3
- Collision insurance covers repairs to your own vehicle in the event of a traffic accident.
- Comprehensive insurance covers non-accident related damages such as vandalism, theft and storm damage.
Important Considerations for Insuring Your Used Car
In addition to the legal and lending requirements, there are many other reasons why insurance on your used car is a smart move:
- Save money in case of an accident: Some people worry about the cost of car insurance premiums. However, the cost of an automobile accident if you’re uninsured is much higher. Without insurance, you may be responsible for all out-of-pocket costs of medical bills and car repairs for yourself and others involved in the crash.
- Be prepared for the unexpected: Even if you’re a safe driver with an excellent record, the reality is nobody is perfect. You never know when another vehicle may pull in front of you unexpectedly or if you’ll hit a slick spot on the pavement. Having insurance means you’re ready for whatever happens when you’re behind the wheel.
- Explore options for infrequent drivers: What if you work from home or live just a short drive from your workplace? Should you still take on the cost of insurance? The good news is that many insurers offer pay-as-you go policies and other options that let you still get the benefits of insurance at a rate that fits your personal driving patterns.
Purchasing Insurance for a Used Car
Whether you already have car insurance for another vehicle, or you need to purchase a policy for the first time, here’s what you need to know about insuring a used car.
How Long Do You Have to Get Insurance After Buying a Used Car?
In some states you may purchase a car before purchasing insurance, but you cannot legally drive it until you have at least the required minimum coverage.
Get quotes from a few different car insurers ahead of time to make sure you’re selecting a policy that meets your needs. Provide as much information as possible to help the insurer give you an accurate quote. You’ll want to provide the full names, birth dates and Social Security Numbers of all drivers who will be listed on your policy, including teen drivers. You’ll also need to provide the make, model, year and vehicle identification number or VIN of the car you plan to purchase. The insurer will also need your physical address.4
Getting a quote ahead of time makes it easier to purchase the policy more quickly after buying your car. Some insurers may allow you to buy a temporary policy to cover you for a few days until you choose a permanent policy.3
Whatever you do, never drive your car until you get it insured. If you get a traffic ticket or get into an accident without insurance, it will cost you dearly. Penalties for driving without insurance may include fines and even a suspension of your license. You may have to pay for medical bills and repairs out-of-pocket. You may still owe payments on the car if it is totaled.4
Adding a Used Car to an Existing Auto Insurance Policy
Depending on your insurer, you have between one week and one month to add a newly purchased car to your existing policy.
Promptly notify your insurer about your purchase. You’ll need to provide information on the car including the make, model, year, purchase price and VIN. The insurer will then calculate your new premium based on this information. You may wish to get quotes from different insurers to make sure you’re getting the best policy for your needs.4
Because used cars typically cost less than comparable new vehicles, they also cost less to repair and replace. In many cases, this does translate into lower insurance premiums. However, there are other factors that will affect how much you pay. These include the vehicle’s make, model and safety features. The insurer will also consider minimum requirements for your state as well as your age. Premiums tend to be higher for families with teens and for older drivers.5
Selecting the Best Auto Insurance for Your Needs
Are you looking for advice on insuring a newly-purchased used car?
At The Resource Center, our independent insurance agents are here to help you select the best insurance policy for your vehicle. We’ll answer any questions you have and guide you through the process. We can also help you identify any discount opportunities you may qualify for.
We invite you to use our free online tool to get an auto insurance quote online. Give us a call at 417-882-1800 or contact us online to schedule an appointment with one of our agents.
Sources:
1: https://www.kbb.com/car-news/wholesale-used-car-prices-set-record-retail-price-increase-likely/
2: https://dor.mo.gov/driver-license/insurance/
3: https://www.kbb.com/car-advice/insurance/need-car-insurance-before-buying-vehicle/
