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Saving on Used Car Insurance

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When recession hit the US and the world, the car industry also suffered losses. Some manufacturers even closed shop because they could not recover anymore. This is because most people chose to buy pre-loved vehicles instead of brand new ones. Thus, demand for used car insurance also increased. This kind of product does not differ much from regular auto insurance and is purchased for the purpose of assuring coverage and protection when an accident happens.

Used car insurance premiums are lower than brand new car insurance policy rates. Insurers deem that the damages and losses to pre-owned car is cheaper, thus, the cheaper rate. This only holds true for personal injury and collision coverage which are not required by law, but are necessary to keep someone from worrying. Liability coverage remains to have the same rate because the car’s age is irrelevant to damages to a third party.

Someone who shops for used car insurance will consider deductibles. A deductible is an amount set by a policy owner and affects the premium rate. Therefore, a higher deductible amount equals to cheaper premium. A deductible is an amount that a vehicle owner will pay the insurer in case of a claim and is deducted from the total cost of damages. The rest is shouldered by the insurance company. For brand new cars, a higher deductible is advised. On used cars, however, some would rather risk spending more for damages and save today. It is just a matter of balancing cost versus risk.

Even for used car insurance, the driving records of a policy owner will still be taken into consideration. Higher rate is quoted to high-risk drivers. To be classified as “high risk” while driving, the following things are checked:

  • Age – young and new drivers, as well as the elderly;
  • Road violations history – too many traffic citations and tickets;
  • Mileage – daily driving distance from one location to another;
  • Area of Habitat – an insurance company will check whether your home is located in a community which has high volume of insurance claims in the past years; and
  • Car model.

Of course, the car model is considered. A high end car that is equipped with racing features will be quoted higher premiums. Insurers reason out that cars of this type are prone to accidents because these are fast and drivers tend to become rowdy and irresponsible racing against other cars. Moreover, thieves will most likely choose high-end cars over, say a family van. Therefore, when buying a pre-owned car, it is best to choose a basic car that will serve its everyday purpose. Insurance companies will not mind as long as there are safety features installed.