How is Insurance Different for Used Cars vs New?

Aside from the initial investment you make when purchasing a car, you'll have to consider the amount you will pay over the life of the vehicle. Things such as routine maintenance, gas prices, taxes you'll have to pay to the state of Missouri, and insurance will add to the total cost of ownership. And when it comes to insurance coverage, you should also keep in mind that options vary depending on whether you need a plan for a used or new car.

Types of Coverage

When you select an insurance policy, you are deciding on the type of financial protection you need in case you experience an accident, theft, or other type of damage to your vehicle. Missouri state law requires that all motor vehicle drivers and owners have motor vehicle liability insurance coverage. The minimum amount required by state law is $25,000 per person for bodily injury and $25,000 per accident for property.

Liability insurance will only protect you financially if you are at-fault in the accident. It will also only protect you up to the coverage amount. If the damages exceed the minimum, you will be financially responsible for the difference and must pay it out-of-pocket. Liability will not help you repair or replace your car if someone else hits you and does not have insurance, or enough insurance.

To provide complete financial protection for your vehicle (regardless of the circumstance), you'll want to select full coverage. Full coverage is an insurance term that includes collision and comprehensive coverage for your vehicle besides the state required liability. There are additional coverage options available for policy holders to select for additional financial security. Each type will add more to the overall annual price you will pay for your premium, but will provide you with extra security should you experience an accident. Additional coverage options may include:

  • Rental reimbursement coverage.
  • Uninsured motorist coverage.
  • Personal injury protection.
  • Medical payment protection.
  • Towing and labor cost coverage.
  • Roadside assistance.
  • Ride sharing coverage.
  • Sound system coverage.
  • Gap coverage.
  • Loan/lease payoff protection.
  • New car replacement coverage.

Each of these options typically has a cap, and will only pay out up to the limit. If your financial liability exceeds the limit, you will need to pay the remaining balance. Consider your needs, how often you drive, how far you drive, your individual driving history, and the value of your vehicle before choosing coverage that is right for you.

What Do Insurance Agencies Consider When Quoting a Price?

When preparing an estimate for a potential client, insurance agencies consider a number of criteria. The driver's age, driving history, credit history, the type of vehicle being insured, marital status, and age are all factors when you get a quote on an insurance policy. In Missouri, insurers can also consider gender when setting car insurance rates.

The average cost of insurance in Missouri ranges from $632 to $1906. Typically, younger drivers and less experienced drivers tend to have higher rates because they are considered higher risk for having a car accident. Essentially, your individual driving history, age, and the type of coverage you choose will determine the insurance rate rather than the age of the vehicle itself.


Another factor to consider is whether you are financing the purchase of your vehicle. In most cases, if you are financing a used or new car purchase and are paying it off in monthly installment payments, the lender (usually a bank or the actual dealership) will require you to purchase both collision and comprehensive coverage to protect the vehicle and their own asset.

Having complete coverage on your vehicle protects the lender from losses and can help in the event of an accident. Verify with the lender the amount you need and get different quotes from insurance agencies to help you find the best price.

Differences in Insuring a New Car vs. a Used Car

Although there are differences when insuring a new car vs. a used car, many factors associated with the driver rather than the car are considered and affect the overall policy and insurance rates. A policy on a used car is generally more economical than a new car, but different makes and models, from a pickup truck to a sports car, will affect the overall price. Some insuring companies consider sports cars a higher risk because of their speed capabilities, while others don't consider it a determining factor.

Some newer cars have a better crash safety rating than used vehicles, and finding parts for a newer model is typically easier. However, newer cars have parts that can be pricey and are often more expensive to replace, especially considering the newer technology new cars offer. Other factors, including the amount of coverage you need to have on a vehicle and whether you are financing, will affect the overall cost of your insurance premiums. If you elect to have a lower deductible in case of an accident, expect the premium to be higher.

Because car insurance is so specific to each vehicle and driver, the final rate weighs more on a combination of factors, rather than simply whether the vehicle is new or used. When a vehicle is worth less, it costs less to insure it when purchasing collision and comprehensive coverage. Cars depreciate the most within the first five years of ownership, so most vehicles younger than five years will cost you more to insure.

Insurance agencies also offer gap insurance, which is an option specific to new cars. Gap insurance covers the difference between the car's depreciated value and the remaining loan amount if the car is stolen or totaled. This option is not typically offered for used vehicles.

Because car insurance is an important when purchasing a vehicle, it is crucial to take its cost into consideration when deciding whether to purchase new or used. Leave a message with us here at CarSmart of Farmington and let us know what questions you have. We'll be happy to provide you with information about our vehicles and purchasing process.


CarSmart of Jackson

2856 Sappington Dr

Jackson, MO 63755


Think CarSmart

4854 US Highway 67

Farmington, MO 63640