Is It Cheaper To Insure a New Car Or a Used Car?
Have you ever wondered if driving off the lot in a shiny new car comes with a hidden insurance cost? The answer, like many things in life, is: it depends. That is why it’s important to be in the know about insurance costs for a new car or a used car. Here at Preston Ford of Keller, we want to help you make informed decisions, so we’re diving deep into the world of new car vs. used car insurance.
Factors Affecting Insurance Cost
So, is it cheaper to buy a new car or a used car? Regardless of whether your car is new or has a few miles under its hood, let’s explore the key players:
Depreciation and replacement value of the vehicle: New cars depreciate rapidly, meaning their value decreases quickly compared to older cars, which tend to retain their value for longer. Insurance companies base premiums partly on the cost of replacing your car if it’s totaled. A lower replacement value for a used car often translates to lower insurance costs.
Advanced technology and repair costs of new cars: Packed with complex electronics and features, new cars can be expensive to repair. Advanced sensors, cameras, and touchscreens come with a hefty price tag, which insurers factor into premiums for newer vehicles.
Insurance Requirements and Costs
Financing a new car throws in additional considerations, such as lender requirements. Lenders often require comprehensive and collision coverage to protect their investments. This “full coverage” can significantly impact your premium compared to liability-only coverage you might choose for a used car purchase.
Types of Car Insurance Coverage
- Liability Coverage: In most states, liability coverage is legally required on your vehicle. If you get in a car accident, liability coverage assists you in paying the expenses of the other people involved in the accident. The two components involved in liability coverage are bodily injury and property damage.
- Personal Injury Plan (PIP): A personal injury plan, also known as no-fault insurance, will provide coverage regardless of who actually caused an accident. Similar to liability coverage, this insurance assists you in covering the medical expenses of you and your passengers, as well as any household expenses or lost wages caused by the accident.
- Full Coverage: Full coverage is an all-encompassing term that refers to liability coverage, PIP, comprehensive coverage, and collision coverage.
- Comprehensive Coverage: Protects your vehicle from any non-accident damage, such as theft, environmental damage, or vandalism. It is often required if you are leasing or financing your vehicle.
- Collision Coverage: Helps the repair or replacement of your vehicle if you face an accident that is caused by an object or another vehicle.
Medical Payments Coverage (MedPay): Similar to PIP, MedPay will cover any medical expenses caused by an accident. The key difference between PIP and MedPay is any lost wages from an accident is not included with MedPay.
Discount Options and Savings
Look for discounts based on safety features in your car (like airbags and anti-theft systems), good driving records, and participation in defensive driving courses. New car discounts are often available for vehicles less than three years old. Companies like USAA, Nationwide, and GEICO offer discounts for specific vehicles with certain safety features. Similarly, American Family Insurance and others reward good driving records with lower premiums, regardless of car age.
Finding the Right Car Insurance
Now that you understand the factors at play, it’s time to find the perfect insurance company for your needs. Start this process by getting quotes from multiple companies like USAA, Nationwide, GEICO, and American Family Insurance. Don’t forget to compare coverage options and read reviews before making a decision.
Top Insurance Companies for Used Vehicles
It’s important to remember that USAA and Nationwide are often considered the cheapest car insurance companies for used vehicles. GEICO and American Family Insurance are also known for offering competitive rates for used cars. However, always compare quotes to find the best fit for you.
Is Insurance Cheaper for New Cars?
There’s no one-size-fits-all answer. In general, used cars tend to be cheaper to insure due to lower replacement value. However, consider your driving record, chosen coverages, and potential discounts for new cars with advanced safety features.
The Bottom Line
When wondering “is it cheaper to insure a new car or a used car?” understanding what impacts car insurance costs, and comparing quotes from multiple companies allow you to make informed decisions. Whether you choose a sleek new car or a reliable used one, Preston Ford of Keller is here to help you navigate the road ahead. Visit us today and find your perfect ride with an insurance plan that fits your budget!
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