When you purchase insurance for a used car, there are some key factors that you need to consider.

Minimum Liability Coverage

In the United States, each state sets minimum requirements for insurance coverage. In New York State, for example, the minimum requirements for auto insurance coverage are $25,000 per person/$50,000 per incident for injury, $50,000/100,000 for death, and $10,000 for property damage caused by any one accident.[1] Check with your state Department of Motor Vehicles to see what the minimum requirements are where you live.

It’s important to keep in mind that these are the absolute minimum limits required by law. It would be a very good idea to carry more than that in coverage for bodily injury and liability/property damage. If you are the cause of a multiple car accident, or are at fault in an accident where a few people are injured, the costs will add up quickly. The additional premiums that you will pay for more coverage is well worth it, and may pay for itself with one incident.

Comprehensive and Collision Coverage

Another consideration is the deductible amounts that you need to have for your used car. The higher your deductibles, the lower your premium will be for the year — but it also means that you would pay more out of pocket if you have an accident. There are two different kinds of deductibles: comprehensive and collision. Comprehensive coverage pertains to any damage that may be caused by things such as acts of God, hit and run drivers, vandalism, or hitting an animal. Collision comes into play when you actually hit another vehicle while on the road. Comprehensive claims do not change your future premiums for insurance, but collision clams will usually have a negative affect what you pay for car insurance. It often makes sense to have a lower comprehensive deductible, and a higher collision deductible, since comprehensive claims may be smaller. Glass is usually covered under the comprehensive deductible, but some insurance companies may have a $0 deductible for glass coverage. Ask your insurance agent about this.

If Your Used Car is Worth Less than $2000

If your used or older car is worth less than $2000, then you should only carry liability insurance. If you have comprehensive coverage, you may end up paying more for the deductible than the vehicle is worth. Don’t forget about the bodily injury liability coverage, however, as this could cover you if you are at fault in an accident and there are injuries. You cannot simply claim that you don’t have the money to pay for the injuries or property damage, you will be liable for those costs if you have insurance or not. So, make sure your coverage is adequate, even on an older or used car.