Are you thinking about getting a new or used car and wondering which is cheaper to insure? In most cases, it’s cheaper to insure an older car than a new one. From the insurance company’s perspective, it’s cheaper to repair and replace an older car than a new vehicle, especially a new sports car or one with a lot of horsepower. For that reason, the insurance premiums for an older or used car, even if it’s just a few years old, can be less expensive than those for a new vehicle.
Parts & Labor Are Typically Less Expensive for Older Cars
If you get into an accident in an older car, the repair costs will often be lower because aftermarket parts can be sourced from auto parts dealers and junkyards. Your car insurance company takes this into consideration when underwriting your policy to determine a monthly premium amount.
It’s Cheaper to Replace an Older Car
Older cars have lower market value than new cars. For example, a new car may be worth tens of thousands of dollars for years after you buy it, which means the insurance company would have to write a much larger check if your car were to be declared a total loss after an accident. By contrast, a used car may only be worth five or ten thousand dollars at the time of an accident, resulting in a much smaller check if the car is declared a total loss. The car insurance company takes the market value of your car into consideration when writing your auto insurance policy.
You Don’t Need as Much Insurance
If your older car is paid off, you don’t need as much insurance because the only insurance required by law is liability, which pays for the repair or replacement of the other driver’s vehicle if you’re found to be the at-fault driver. When you have a new or used car that you’re still paying off, your financial institution will require you to have liability, collision, and comprehensive insurance policies on the vehicle, which could increase the cost of your monthly premium by hundreds of dollars a month.
When they need affordable, reliable auto, renters, commercial, or homeowners insurance, San Diego residents turn to the experienced agents at Altra Insurance Services. Call one of our friendly representatives today at 619-474-6666 to learn how you can save money on your auto insurance.