Insurance for New vs Used Automobiles

Vehicles’ ages don’t affect the way they are insured but their value either forces owners to buy more coverage or allow them to drop some of it. Although it isn’t always the case, insurance for a used car is cheaper than for a new vehicle, mainly because of their values and the gap opens up the older the secondhand automobile gets. It is difficult to give an estimated premium difference because many other factors go into premium calculations, including drivers’ ages, experiences, histories and state they live in.

The difference in premiums is less to do with a vehicle being new or used but more to do with the coverage levels, its make, model, value and other particulars and zip code. Insurers hardly ever care about a vehicle being new or used as they are mostly insured in the same way, especially there is no difference in the Liability insurance requirements or needs.

However, motorists are likely to buy a latest model automobile with a loan and therefore they may need Collision, Comprehensive and GAP insurance for it. Contrarily, they would have paid off any loan if there was any for an older car so they would be free to choose if they want full coverage or liability only auto insurance.

New cars are more expensive to insure because they have higher values so insurers would pay more if it is totaled. Repair costs may be similar but companies can write off an older vehicle when the repairs get expensive. A vehicle’s value affects the costs on Collision, Comprehensive and GAP coverage portions of a policy and therefore increases premiums more. On the other hand, better security features may qualify an owner for a discount on the theft portion of Comprehensive Coverage and that doesn’t really add up to much.

Latest model vehicles would come with better safety and security features but their effect is limited in terms of discounts. Besides, it may take time for the new features to be tested and considered when calculating premiums. Furthermore, some car insurers may be cautious of them as they may also increase driver distraction and drivers may overly rely on the technology to a point that they don’t pay enough attention.

Some insurers may offer a slight discount for brand-new cars because they are less likely to cause accidents as a result of a mechanical problem. If you can locate such companies, you may enjoy the discount but this doesn’t mean the overall premium will be competitive. That is why motorists are advised to get a few quotes to see prices in comparison to other companies.

The real difference in auto insurance costs start to show when owners choose to get liability only coverage for older automobiles. Then, they could save as much as 60% on their premiums in comparison to insuring a new vehicle fully. Of course, they won’t have this choice with a car, which is bought at a considerable expense. Hence, it is sensible to have full coverage for a new automobile.

Also, other factors can be influential on vehicle insurance costs. For example, middle-aged drivers with clean accident and ticket records, credit scores and living in a low-risk zip code won’t see a significant difference in premiums whether they choose a used or new car because their rates are lower to start with.

On the other hand, a teenager with a new car would have to pay substantially more for automobile insurance since higher rates are applicable to them. They would suffer further since it would be harder to get a liability only policy and pay the lowest premium available.

One major advantage of buying a new vehicle is that they don’t usually cause any concerns for at least three years in terms of maintenance, changing parts and breaking down. And they come with at least three years of mechanical warranty these days anyway. However, they lose their value very fast, especially in the early years. That is why lenders require GAP insurance for them.

On the other hand, you really don’t know what you are getting into with a second hand auto, especially after 3 – 4 years. You have no idea why people are selling it if it is a private purchase. However, even used car dealers offer warranty these days and there is a thing called dealer authorized vehicles, which are checked and serviced by the engineers who are well trained for those brands.