Are Older Cars Cheaper to Insure?

October 11, 2024

Many drivers considering the purchase of a new car have questions about how it will impact their insurance premiums. One of the most frequently asked questions from car owners is, are older cars cheaper to insure?

The short answer is that yes, in most cases older cars are cheaper to insure than new ones. That said, there are some limited exceptions to this rule. To help you decide on the right vehicle for you, here’s an overview of car insurance for older cars.

To learn more or get a free auto insurance quote, contact GoAuto Insurance.

Why Your Car’s Age Impacts the Cost of Insurance

Cars depreciate over time. This means that a new vehicle is worth more than an older vehicle of the same make and model.

Because older vehicles are worth less, your insurance company would have to pay less to replace your vehicle if you file a claim. As a result, insurance premiums are generally lower for older cars.

One of the largest periods of depreciation is the first year of a car’s life. Insurance rates drop around 10% once a car is a year old. Given that new cars are worth more and usually have more advanced features, they are more expensive to insure.

Factors That Impact Insurance Rates of Older Cars

To better understand how the age of a vehicle impacts insurance rates, it’s helpful to look at some key factors impacting your car insurance premium:

The vehicle’s value. When you file a claim, your insurance company will have to repair or replace your vehicle. Your insurance company considers the cost of replacement when setting insurance rates. The more your vehicle has depreciated, the lower the replacement cost. Because of this, depreciation can significantly impact insurance rates.
Repair costs. Many claims simply involve vehicle repair rather than replacement. Generally, older cars are less expensive to repair than new ones. New vehicles have advanced features and complex computer systems. These often require specialized skills and expensive parts to repair, making new cars more expensive to repair than old ones.
The coverage you have. A key factor in the cost of insurance is the type of coverage you have. If you’re financing a vehicle, you’ll likely have to have full coverage. Once you’ve paid it off and own it outright, you can reduce your coverage to your state’s minimum requirements. More older cars are paid off, which means drivers can reduce coverage and the amount they spend on car insurance.

Reasons an Older Car Could Have Higher Insurance Rates

While older cars are usually less expensive to insure, there are some times when an older car is expensive to insure. This can be the case for:

Antique or classic cars
Cars that lack key safety features
Makes and models of vehicles with parts that are expensive to replace or repair

If you’re considering insuring an older car that is unique or particularly valuable, it could lead to higher insurance rates. Contact an auto insurance professional to learn more about whether your vehicle falls into this limited category of older cars.

What Coverage Is Needed for Older Cars

If you’re purchasing insurance for an older car or renewing your car’s insurance, there are a few things you should consider.

Your state’s minimum insurance requirements. All drivers must carry the minimum amount of insurance required by their state.
Your lender’s requirements. If you’re financing your vehicle, your lender will have specific coverage requirements.
Whether or not you can afford to replace your vehicle. Many older vehicles are not financed, which means drivers can choose to drop collision and comprehensive insurance. Drivers should only do this if they can afford to repair or replace the vehicle without help from insurance.

Tips for Lowering the Cost of Car Insurance for an Older Vehicle

Driving an older car can be a good way to reduce the cost of insurance. You can further reduce car insurance premiums by:

Increasing your deductible
Reducing the amount of coverage you have
Comparing quotes from multiple car insurance companies
Asking your insurance company about discounts

Get a Free Car Insurance Quote

If you’re looking for car insurance, GoAuto Insurance can help. Our experienced team works directly with customers. We can answer questions about coverage and discuss factors that impact your vehicle’s insurance rates.