🚗 When do I need insurance on a used car?

You need coverage before you drive it . If you're buying from a dealership, they'll ask for proof of insurance before you leave.

💵 How is a used car's value determined after an accident?

If your car is totaled, your insurer pays its actual cash value (ACV) , which is what the car was worth immediately before the accident, based on its age, mileage and condition. This may be less than what you paid, especially if you bought from a dealer.

📉 Why is used car insurance usually cheaper?

Used cars have lower market values, which means insurers pay out less when they're totaled or damaged. Older cars also tend to have simpler, cheaper-to-replace parts than new vehicles loaded with sensors and cameras.

🛡️ What's the difference between "full coverage" and liability-only?

Liability-only covers damage you cause to others. Full coverage adds collision and comprehensive, which cover damage to your own car.

🔧 Should I buy a dealer warranty or mechanical breakdown insurance?

Compare the costs. Dealer warranties are often marked up significantly , while MBI from your insurer may offer similar protection for less.

Updated December 5, 2025

Used Car Insurance: What You Need to Know

Buying a used car can save you thousands compared to buying new, and your insurance costs can be lower too. But “used car insurance” isn’t a specific policy type. It’s simply the coverage you choose for a pre-owned vehicle, and the right mix depends on your car’s value and how you’re paying for it.

Jerry has helped 121,938 drivers buy insurance for their used car in the past year. Here’s what you need to know about getting the right coverage.

Jerry pulls up to 20 quotes from top rated carriers.

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What kind of insurance do you need for a used car?

The coverage you need legally depends on two things: what your state requires and whether you’re financing or fully own the car.

Coverage type	What it covers	Do you need it?
Liability	Others’ medical bills and property damage when you’re at fault.	Required by law, except in New Hampshire.
Collision	Your car repairs after hitting another car or object.	Required if financing. Optional if you own your car outright.
Comprehensive	Damage to your car from theft, vandalism, weather and accidents with animals.	Required if financing. Optional if you own your car outright.
Uninsured/underinsured motorist	Your costs when hit by uninsured or underinsured drivers.	Required in some states. Strongly recommended everywhere.
Personal injury protection (PIP)	Medical bills, lost wages, childcare after an accident.	Required in no-fault states.
Medical payments (MedPay)	Medical expenses only after an accident.	Optional in most states, but may be worthwhile if you don’t have health insurance.

Liability

What it covers

Others’ medical bills and property damage when you’re at fault.

Do you need it?

Required by law, except in New Hampshire.

Collision

What it covers

Your car repairs after hitting another car or object.

Do you need it?

Required if financing. Optional if you own your car outright.

Comprehensive

What it covers

Damage to your car from theft, vandalism, weather and accidents with animals.

Do you need it?

Required if financing. Optional if you own your car outright.

Uninsured/underinsured motorist

What it covers

Your costs when hit by uninsured or underinsured drivers.

Do you need it?

Required in some states. Strongly recommended everywhere.

Personal injury protection (PIP)

What it covers

Medical bills, lost wages, childcare after an accident.

Do you need it?

Required in no-fault states.

Medical payments (MedPay)

What it covers

Medical expenses only after an accident.

Do you need it?

Optional in most states, but may be worthwhile if you don’t have health insurance.

Jerry recommends: Even if your state only requires minimum liability, consider limits of at least 100/300/100. One accident with injuries can cost over $160,000, according to the National Safety Council, and minimum coverage won’t come close to covering that.

Get insurance for your used car with Jerry

When you’re buying a used car, comparing insurance quotes from multiple carriers helps you find the right coverage at a price that fits your budget.

Jerry partners with over 50 insurance carriers and shows you quotes side-by-side. You can adjust your coverage levels and deductibles to see exactly how each choice affects your premium—and find the policy that makes sense for your car’s value.

Skip the hassle. Jerry finds competitive quotes in minutes.

How much does used car insurance cost?

Insurance for a used car costs between $181 and $401 per month, according to Jerry’s customer data.

Factors that affect your rate include:

🚗 Your car’s value and repair costs.

A 10-year-old Honda Civic costs less to insure than a 5-year-old BMW, even though both are “used.” Luxury brands, sports cars and vehicles with expensive parts cost more to cover.

🛡️ The coverage you choose.

Liability-only costs less than full coverage, which adds comprehensive and collision coverage. If you do have full coverage, raising your deductible from $500 to $1,000 can lower your premium significantly.

📍 Where you live and how you drive.

Your ZIP code, annual mileage and where you park overnight all factor into your rate.

📋 Your driving history.

Accidents, tickets and lapses in coverage can raise your premium. A clean record helps you qualify for better rates.

💵 Discounts you qualify for.

Bundling with home insurance, paying in full or enrolling in a telematics program like DriveShield can reduce your costs.

Jerry recommends: Don’t assume your current insurer has the best rate for your used car. Rates vary widely between companies, and switching carriers is one of the fastest ways to save.

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Should you get full coverage on a used car?

Full coverage pays to repair or replace your car if it’s damaged, after you pay your deductible. Higher deductibles typically result in lower car insurance costs.

Consider full coverage if:

You’re financing or leasing your used car. Lenders require collision and comprehensive coverage.
Your used car’s market value is above $5,000.

You may be able to skip it if:

You own your car and can afford to replace it if it’s totaled.
The used car’s market value is below $5,000.

Key takeaway: You’ll need full coverage if you’re financing or leasing your car, and it’s worth considering if your car’s value is above $5,000. If your used car doesn’t have much value, you can likely skip it.

Does a used car need gap insurance?

Gap insurance covers the difference between what your car is worth and what you still owe on your loan. It’s most valuable when you’re “underwater,” meaning you owe more than your car’s market value.

You may want gap insurance if you're:

Making a small down payment.
Financing for a long term (72+ months).
Rolling negative equity from a previous loan into your new one.

You probably don't need it if you:

Make a large down payment.
Have a loan balance close to or below your car’s market value.
Buy the car outright.

Key takeaway: You’ll need gap insurance if your used car’s value is less than the loan you take out to finance it, but otherwise you probably don’t need it.

Other coverages worth considering

A few optional add-ons can be especially useful for used car owners:

🔧 Mechanical breakdown insurance (MBI):
Similar to an extended warranty, MBI covers repairs when parts fail due to normal wear. It’s often cheaper than dealer warranties and can be a smart choice if your car is out of its original warranty period.

🚙 Rental car reimbursement:
Pays for a rental while your car is in the shop for a covered claim. Useful if you depend on your car daily and don’t have a backup.

🛣️ Roadside assistance:
Covers towing, jump-starts, lockouts, and flat tire help. Older cars break down more often, making this a low-cost add-on worth considering.

It only takes 2 minutes to sign up at Jerry.

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faq

🚗 When do I need insurance on a used car?

You need coverage before you drive it. If you’re buying from a dealership, they’ll ask for proof of insurance before you leave.
💵 How is a used car’s value determined after an accident?

If your car is totaled, your insurer pays its actual cash value (ACV), which is what the car was worth immediately before the accident, based on its age, mileage and condition. This may be less than what you paid, especially if you bought from a dealer.
📉 Why is used car insurance usually cheaper?

Used cars have lower market values, which means insurers pay out less when they’re totaled or damaged. Older cars also tend to have simpler, cheaper-to-replace parts than new vehicles loaded with sensors and cameras.
🛡️ What’s the difference between “full coverage” and liability-only?

Liability-only covers damage you cause to others. Full coverage adds collision and comprehensive, which cover damage to your own car.
🔧 Should I buy a dealer warranty or mechanical breakdown insurance?

Compare the costs. Dealer warranties are often marked up significantly, while MBI from your insurer may offer similar protection for less.

Methodology

Data included in this analysis comes from policies that Jerry has quoted within the last 6 months for drivers with a clean record and that have full coverage, unless stated otherwise. Data related to violations, accidents or credit scores pull from quote data from the last 18 months. Jerry services 48 states and offers a range of insurance companies to choose from.

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Our experts

Ben Moore

Ben Moore is a writer and editor at Jerry and an auto insurance expert. He previously worked as a writer, editor and content strategist on NerdWallet’s auto insurance team for five years. His work has been published in The Associated Press, Washington Post, Chicago Sun-Times, MarketWatch, Nasdaq and Yahoo News. He also served as a NerdWallet spokesperson, with appearances on local broadcast television and quotes in Martha Stewart and Real Simple magazine.

Ben has an extensive background in digital marketing, working on affiliate and programmatic advertising campaigns for brands like Cabela’s, H&R Block and Sears. He holds a bachelors degree in marketing from Olivet Nazarene University.

^†Over the past 12 months, 25% of drivers who switched with Jerry paid $89 or less per month. Not all customers find savings. Savings depend on state, policy features, coverage, driving history and other factors.

Editorial Note: This article was written by a paid member of Jerry’s editorial team. Statements in this article do not constitute advice or recommendations. You should consult with an insurance professional about your specific circumstances and needs before making any insurance decisions.