Buying a used car will save you a lot of money as the price is almost 50% less than a new car. In order to get all the safety coverage for your car and yourself you still need car insurance. The car insurance process is the same for both used and new cars but there is a slight difference in rates. Insurance is the essential liability that is worth purchasing otherwise you will be punished legally for not getting one.
However, the insurance rates you pay on used cars are lower than new ones because the market valuation of used cars is less. The car model’s reputation and its history also have a direct impact on the insurance rates.
In this blog, I will highlight key aspects that you should consider before purchasing insurance coverage for a used car.
How to estimate the cost of insuring your car?
Ownership – The first thing to determine the cost of insuring your car is your ownership status. For purchasing a used car you either pay it fully or finance it from a bank or a used car dealership.
If you fully own a vehicle, you have the choice of whether to buy just liability insurance or buy additional coverage for the protection of your car.
You need to pay for the additional coverage rates if you finance or lease a car from a financial institute. In this case, contact your lender and see what additional coverage benefits they are providing.
PRO TIP – While inquiring about car insurance always ask your agent “What not is included in coverage?”. The agent will tell you about the coverage scope, and you can opt for additional insurance coverage.
Choose Liability Coverage –
As the name suggests, liability coverage is for the liability of your car. It also includes the damage to others, property damages, loss of life. This is the same for both used and new cars. In many countries, it is mandatory to have third-party liability coverage.
- This insurance policy has a limit so if the cost exceeds this coverage then the insurance company will not pay for your damage.
- Use the 30% rule – If your liability coverage offers coverage up to 30% of the original cost of the car, then it’s worth taking it. If not, you should look for extra protection plans.
Decide Whether to Buy Comprehensive Insurance or Collision insurance
Comprehensive insurance covers the damage to your car caused other than the collision. This includes damages caused by a tornado, flood, fire, a running deer, riots, vehicle theft or theft of any part, falling objects, etc. In other words, this insurance is for damages that are beyond your control.
Collision insurance covers any damages caused by a direct collision with another vehicle or object.
- If you have financed your car then automatically you have to pay for both comprehensive and collision insurance.
- If you leased a car then you are required to purchase collision insurance.
- The rates of this additional coverage depending on the amount of money you pay before the insurance cover, so raising your deductibles will help you in lowering the premiums, in the case of comprehensive insurance.
- Neither of these additional packages covers medical bills in case of an accident or damages to other people’s vehicles during an accident.
A good rule to follow while deciding to buy these coverages is if the rate exceeds 10% of your car value then it’s not worth it to pay for these rates. While purchasing these types of insurance be sure to compare rates of different insurance companies.
How to get good insurance rates for your car?
After estimating the requirements of your used car insurance, now it’s time to search for the agent or company which will offer good insurance rates for the coverage you selected.
- Search for Insurance Companies – A google search is enough to get the list of car insurance companies in your city. There are many brokers and well-reputed agencies located near you. Read their reviews or you can also get recommendations from your friends or family. A good keyword for searching on google is “auto insurance near me”.
- Get Quotes, Compare Premium and Discounts – Get at least 10-12 car insurance quotes and then compare the rates. You will notice the difference in rates of big and small car insurance companies.
- Now you get the quotes, it’s time to compare the monthly premiums that you are paying for your used car insurance. Also, check the discounts they are offering. In other words, you have to do your research and evaluate the options available and choose wisely.
- Tips to Save Money on Car Insurance – Here are some tips and tricks that you can use to save money on car insurance:-
– Insure other cars from the same provider.
– Paying premiums in a lump sum will help you in saving monthly premium fees. This means paying six months or one-year premiums in one amount. It will save you money.
– Getting other insurances like home, life insurance from the same agency.
How to purchase Auto Insurance?
As far as auto insurance is concerned the same rule applies to buying a car from a private seller or from a dealership.
- Check your Current Policy – If you already have car insurance on another car then your plan will automatically cover your new car for a few days. This does not mean that you don’t have to purchase car insurance for a new car. This is useful if you are purchasing a car at the weekend or during the official holidays. Contact your insurance provider to make sure that the old insurance may cover your existing purchase.
- Add to your Existing Plan without Purchasing – You can also add a car to your existing insurance plan without even buying it. For this, you need an existing insurance policy and vehicle registration number (VRN). To do this simply visit your existing broker and ask them about this insurance coverage and the documents needed.
- Buying an Auto Insurance after Purchasing Used Car. Third-party auto insurance is mandatory in some countries. If the used car that you purchased already has insurance then you need to transfer it to your own name. Here are the steps to transfer ownership and insurance to your name if you have purchased a car from a private buyer:-
-Visit the Regional Transport Office and fill up the form to transfer the ownership.
-Attach the required documents which are required to transfer RC.
-Once RC is transferred then fill the fresh form to transfer the insurance policy, pay the fees, and the car’s insurance policy will be transferred to your name.
If you purchased a car from a dealership then it is the dealer’s headache to do all the work.
Having car insurance is mandatory and it will give you peace of mind as well. Doing your own research and choosing the best premium plans will save you money and give coverage to your used car.