When insuring a used car, you follow the same basic guidelines as for a new one. The owner’s objective ultimately is to guard himself from liability in case there is damage to the vehicle or if something happens to the occupants of the car or other people during accidents. The only major difference is that when a used car is reported damaged or stolen and a claim is made for the loss, the insurer’s potential loss is lower than that of a new model. Hence, the insurance company charges less for the comprehensive and collision coverage thereby, lowering the premium. However, since used cars also can inflict an equivalent damage to other vehicles, people, structures, etc, the liability rates are the same, regardless of how old the car is.
If you are looking to purchase insurance for your car, you need to consider a lot of factors. Since used cars are less valuable than brand new ones, the insurance buyer would want to put additional thought into buying a policy. Take for example – you would not want to maintain a high coverage for your comprehensive and collision insurance, when you find that you can get sufficient coverage with lower payouts for a smaller premium. Similarly, a low deductible makes more sense only on a brand-new car. So, used car buyers would want to save some money by raising the deductible and consequently, lowering their premium. Since the used car may have some wear and tear already, owners may not look to invest in minor damages. However, one thing they need to keep in mind is that when the deductible is higher, they would have to shell out more money from their own pockets in case of a claim.
The minimum requirements for an auto insurance coverage vary from state to state. It depends on the place where you reside. Consider this; in the state of Colorado, the minimum requirement for auto insurance coverage is 25/50/25. This is pertinent to bodily injury liability limits that means the liability would be $25,000 per person, $50,000 per incident, and $15,000 for property damage. You must understand that these are the absolute minimum limits demanded by law. However, it is advisable to go for more in case of bodily injury and liability or property damage. When you get involved in an accident, like a multiple pile-up or a major accident where quite a number of people are injured, you might end up causing more damage than you expected. So, it is always better to go for the additional coverage and pay the extra premium because it will be very useful if you face situations as above.
Comprehensive and Collision Coverage
Before you go for an insurance purchase, there are a few things you must know beforehand. You must have an idea of how things work in insurance. For a situation such as yours, where you are looking to get insurance for your used car, you need to consider what deductible amount you should work out. First of all, you have to know that the greater your deductible is, the lower is your premium amount for that particular year. Additionally, you have to know the two different types of deductibles: comprehensive and collision. Comprehensive covers damages that are caused to your vehicle through vandalism, natural cause, hit and run, or hitting an animal. Collision coverage pertains to the coverage you receive for accidents, where you actually collide with or hit a vehicle while you are driving. Comprehensive claims do not play a role in a future insurance premium and they do not affect them. On the other hand, collision claims have a negative affect on your future insurance premiums. Hence, it is always advisable to lower your comprehensive deductible and raise your collision deductible. Check and find out what the ideal comprehensive-collision coverage should be for your personal auto. Even glass is covered under the comprehensive deductible. In some insurance companies, glass coverage has a $0 deductible. So, it is better to confirm with your agent.
Used Cars worth Less than $2000
You would have a tough time deciding on the type of insurance to get when your car is old and is worth less than $2000. It is a good idea to cover your used car with a liability only insurance when it is not worth more than $2000. In doing so, you are not spending on a collision deductible since the cost of the deductible is more than what your vehicle is worth.
However, make sure you get the bodily injury liability coverage. It will cover you when the fault is yours in an accident. In such cases, you can avoid a situation where you find that you do not have coverage and pay from your pocket for the injuries and property damage you have caused. Without the coverage, you will be caught on the wrong foot trying to explain people that you are bankrupt and do not have the coverage to pay for the damages.