Auto Insurance: Used Auto Insurance Tips
In these tough economic times, many people are realizing that it makes much more sense to purchase a used auto than a new auto. Although many aspects of the buying process are the same, buying a used auto involves different costs and risks compared to buying a new auto.
New autos depreciate greatly in value as soon as you purchase one and drive it off the dealer’s lot, whereas used autos have already had this steep depreciation in value. Used autos typically cost less to purchase, and over the course of time will cost their owners less in general. So, if you’re buying a used auto, you should feel confident in your decision, but don’t forget the final step of the process, choosing used auto insurance.
On paper, used auto insurance does exactly the same things that new auto insurance policies do; they protect you from liability if you are in an accident, and make it easier to afford auto repairs if something happens while you are driving the auto. However, there are some important differences between auto insurance rates for used autos and auto insurance rates for new autos. Most importantly, auto insurance rates for used autos tend to be lower than the rates for new autos.
This fact about used auto insurance might not make any sense to the average driver. After all, aren’t new autos nicer and therefore more reliable? This might make sense on the surface, but from the point of view of the auto insurance company that sets the rates, a used auto is a much safer investment for them. The truth is that if a used auto is in a accident and totaled, the insurance company stands to lose a lot less money than if a new auto is totaled. This is why used autos demand much lower auto insurance rates.
If you are getting ready to buy a used auto, you should know that dealerships in many states are required to ask for proof of valid used auto insurance before they can allow you to drive the auto off of the lot. This means you should get a couple of auto insurance quotes from local and national auto insurance agencies to see which type of policy is right for you before you finalize the purchase. In addition, insurance companies have very unique criteria for how they set auto insurance rates including the geographic area, your driving history, how you will use the auto, and the specific auto itself.
Comparing multiple auto insurance company quotes and policy options will help ensure you are getting a good deal.