The Best Coverage for Used Car Auto Insurance

The best insurance coverage for used cars means carrying more than the minimum liability coverage for your state. Depending on the value of your car, you may also opt for collision and comprehensive.

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Zaneta Wood, Ed.S. has over 15 years of experience in research and technical writing bringing a keen understanding of data analysis and information synthesis to reach a wide variety of audiences. She studied adult education and instructional technology at Appalachian State University as well as technical and professional communication at East Carolina University. Zaneta has prepared technical p...

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Joel Ohman is the CEO of a private equity backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Jo...

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Reviewed by Joel Ohman
Founder & CFP®

UPDATED: Jul 22, 2021

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Here's what you need to know...

  • Each state has a mandated minimum level of insurance you must carry to drive
  • Usually, this minimum level is not enough to offer true financial protection
  • Collision and comprehensive coverages are options you should consider
  • There are many uninsured drivers on the road today, and you should think about a policy that includes coverage for a potential accident with those drivers
  • If you’re financing or leasing a vehicle, your financial institution may have requirements for the levels of insurance you must carry

The recommended auto insurance coverage for a used car varies in many ways. However, simply because you have a previously owned vehicle does not mean you can skimp on the levels.

Purchasing auto coverage for a used vehicle is almost the same as with a new car. The details are slightly different, but the considerations are not.

For example, you still need to know the limits in your state. Failure to provide the proper amount can cause major problems.

You also need to comparison-shop for great deals because the type of vehicle you purchase continues to rate high in the way auto insurance companies assess your risk.

The general rule is that new cars are more expensive to insure, but this is not always the case.

This is very true for classic automobiles and sports cars. Both of these kinds of vehicles have considerable value and risk factors.

When it comes to repairs on used cars, insurance is also something you need to think over. Most car insurance companies specify the use of certain car repair shops, which may use aftermarket parts as replacements.

While this helps decrease costs, Consumer Reports warns against these practices.

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State Minimum is a Must

Regardless of the age of your car, you must add liability bodily and property damage. Every state mandates this amount and you cannot legally drive without this type of policy.

The only issue is how much you think you need.

Unfortunately, every state differs in these levels so you really need to think about your current financial abilities. For instance, in the state of Delaware, the limits are very low.

Just the bare minimum in Delaware covers 15/30/10; when comparing these limits to a state like Alaska with 50/100/25, it is easy to see just how varied they really are.

This is when common sense enters the scenario.

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Is it worth having full coverage auto insurance?

Under most circumstances, a $15,000 payment for personal injuries may not cover medical expenses. In addition, $10,000 for property damage may not be enough to pay a construction crew, let alone the materials they require.

Since property damage also includes the other driver’s vehicle, this amount does not seem high enough for the person involved to purchase a new vehicle either.

For these logical reasons, many people who purchase a second-hand car opt for the highest limits of recommended auto insurance coverage by their agents, brokers, or representatives.

The majority go up to $250,000 without a major increase in premiums.

What is recommended for car insurance coverage?

After deciding on your standard level, one of the first things you need to reflect upon for the recommended auto insurance coverage amounts should be the level of physical damage protection.

Your selection in this area is crucial. You need to understand what your car is worth. Collision coverage is a great option, but if your car has very little value financially, this may work against you.

The same rule applies if the car needs a lot of work because of the condition. Collision only protects you if the damage results from new issues, not existing problems.

If you need to pour out a substantial amount of money for repairs just to get the car running properly, you may want to eliminate this level.

On the other hand, you can always choose a very small amount of collision coverage just to make sure you can take care of minor dings and dents.

Just bear in mind that you will need to pay a deductible before the car insurance company pays for your claim.

Comprehensive Coverage

Another type of coverage for used cars includes comprehensive.

Even if you live in a safe and secure area, anything can happen to cause non-collision-based damage. This includes:

  • Floods
  • Fire
  • Animals
  • Theft

Even if you have a low-profile car that never makes the top list of most stolen vehicles, there is no guarantee that it will not happen to you. In fact, according to the

In fact, according to the Federal Bureau of Investigation, car theft occurs in more places than most expect, and to older vehicles as well as newer, flashier cars.

Since older vehicles are less likely to have ant-theft devices or vehicle recovery systems, they are much easier to steal.

The southern part of the United States actually has more reported cases than the bustling metropolitan areas on the East Coast. No one is safe from auto theft, and it is time to replace the myths that these kinds of crimes only happen in cities.

Only 5.4 percent of all car theft happens in the East Coast region, while 21.5 percent takes place in southern sections of the U.S.

To expand further on these statistics, this means every 43 seconds in the U.S., someone steals a vehicle.

Comprehensive coverage is the only way for you to protect your property and investment. However, you must also be smart in how much you purchase.

Just like collision, your car insurance company will only pay for the current value of the vehicle. If vandalism occurs, your estimate for repairs determines the amount of the claim settlement.

Make sure you select enough to cover the costs for major damage, including a total loss, but not more than the actual value of the car.

You could wind up paying a high annual premium for something that your auto insurance provider will not match.

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The Hit-and-Run Driver and the Non-Insured Groups

Although uninsured/underinsured motorist coverage is not mandatory all over, many states require this level of protection. Too many drivers today just do not have the correct amount of car insurance.

There are several reasons this happens, most state economic causes.

However, the statistics prove the number of Americans without car insurance continues to grow each year.

While some states can boast of really low percentages of uninsured drivers, other states have uninsured driver numbers that are higher than 25 percent; one in four drivers on the road has no insurance at all.

Unfortunately, this means you can find yourself involved in a major dilemma. You must weigh your options very carefully because you cannot rely on someone else’s insurance as a bailout.

Suppose someone sideswipes your mirror or fender and keeps going without a second thought. The incident happens so quickly you do not have time to look at their license plate number.

Now, you have a problem that you did not cause, but you deserve resolution. Even if you did have the opportunity to jot down their license plate number and they have no insurance, they likely have no means to pay for the damage.

This is why you should think about uninsured/underinsured motorist coverage for your used car. If this occurs, you can call your car insurance company and submit a claim.

They will help you complete the steps to repair your car, without cost to you.

In addition, if you do manage to acquire enough information on the responsible party, they can open an investigation on your behalf. Perhaps the other driver does not have insurance, but they do have employment.

You can seek criminal charges and receive restitution this way. It is better to protect yourself by paying a small amount towards this coverage than to take the risk of losing money and transportation.

Temporary Transportation

A form of temporary transportation, called rental reimbursement is worth looking into. Many people who own used cars do not think to purchase this type of coverage because they think it is not worth the price.

However, if you receive a lower rate based on the year, make, and model of your vehicle, it will not increase the premium that much.

If you ever need to rent a vehicle due to an accident, you can rest easy knowing the cost does not come out of your own pocket.

The great aspect of rental reimbursement is your car insurance company will likely place you on a per-day budget.

You know how much they pay for the rental and this allows you to choose from a large inventory. As long as you remain within the limits, you have nothing to lose.

The process is very simple too. Rental car companies deal with auto insurance providers on a daily basis. They can explain everything to you in non-technical language and work with your car insurance company.

You may not have to do anything except make the initial call.

Financing and Leasing Used Cars

Many banks like Wells Fargo and Chase provide automobile loans for new and used cars.

They offer great rates and terms for their customers within the U.S. You can usually find loan interest rates for a used car that are just as good as interest rates for new car loans.

In addition, finance companies like AmeriCredit, which is part of the General Motors financial group, provides leasing options for most used car dealerships.

As a result of these options, many Americans choose to lease or finance their vehicles. They make payments on a monthly basis until the end of the agreement period.

These types of cars usually require an additional level of car insurance over the standard liability coverage.

In essence, the financial institution pays the dealer for the car and the consumer has an obligation to repay the amount at a specified interest rate.

Because they technically own the vehicle, they generally want the highest level of protection as a safeguard. This becomes the responsibility of the customer.

If you have a leased or financed vehicle, regardless of the make, model, or year, you must adhere to the full coverage requirements of your financial institution.

Unless your contract states otherwise, you will need to retain a certain amount of coverage and be prepared to provide proof if they ask.

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