Do I Need Insurance for a Used Car?

Laws in most states require that you carry coverage for a used car.However, you may be able to save on certain options.

Whether you're driving a new car, a certified pre-owned vehicle, or an older used car, you'll need to purchase an auto insurance policy before you take to the road. However, the specific kind of insurance, as well as the coverage amounts, can vary depending on your needs, comfort zones, and the value of your vehicle.

Beyond the Minimum

As a licensed driver, you're required by state law to carry auto insurance. The minimum amount of coverage a driver is required to carry by law is what's known as the "Financial Responsibility Limit" for your state. But this may not be the best way to gauge the amount of coverage that's right for you.

For instance, all states require that you carry a certain level of "third party" liability insurance. Third party liability coverage means accident-related bodily injury and/or property damage costs will be paid for victims other than yourself. Third party liability will not cover any of your own medical or repair costs.

Carrying a policy that adheres only to state minimums will keep you in compliance with the law, but it may expose you to risks greater than your comfort-level. For that reason, you might want to use your state minimums as a guide — one that can help you build a policy that best suits your needs, your income, and the things and people you want to protect.

Our Bumper-to-Bumper Basics^SM virtual guides can help clear any confusion you might have about these various coverage options, and help you decide on an auto insurance policy that makes sense for you.

Value Versus Protection

Collision Coverage and Comprehensive Coverage are fairly standard on most auto insurance policies, even though this type of coverage is optional in most states.

Taken together, Collision Coverage and Comprehensive Coverage help cover damage caused by other vehicles, stationary objects, storms, vandalism, or theft (among other things). Because some of these losses can be expensive, it's important to know the true value of your used vehicle.

For instance, if your used car is worth less than, say, $1,000, having a low Collision Coverage or Comprehensive Coverage deductible may be more cost than it's worth. If you make a claim, even if your vehicle was deemed a total loss, the maximum amount you'd receive would be the actual value of the car (which accounts for depreciation), minus your deductible. This relatively small settlement amount may be worth far less than the amount you'll be paying in premiums. Adjusting your deductibles, or eliminating Comprehensive Coverage and Collision Coverage entirely, may be a way to save money on a used car.

Your Allstate agent can help you crunch the numbers, and make any necessary cost-saving adjustments to your auto insurance policy. Alternately, any of our knowledgeable, licensed insurance representatives can help you 24 / 7, 365. Give them a call at 1-866-621-6900.