Buying a car—new or used—is a big decision, and one of the first questions that pops up after the excitement of picking your ride is: How much will insurance cost? Whether you’re eyeing a shiny new sedan fresh off the lot or a reliable used SUV with a few miles under its belt, insurance quotes can vary significantly. But why? And what exactly drives these differences?
In this guide, we’ll break down how insurance quotes differ for new versus used cars, diving into the factors that insurers consider, real-life examples, and expert insights to help you make sense of it all. By the end, you’ll have a clear picture of what to expect and how to snag the best deal on your car insurance. Let’s get started!
Why Insurance Quotes Vary Between New and Used Cars
Insurance companies aren’t just tossing numbers at you randomly. They calculate your premium based on risk, and the type of car—new or used—plays a big role in that equation. New cars often come with higher price tags, advanced tech, and pricier repairs, while used cars might have their own set of quirks, like age-related wear or missing safety features. Here’s a closer look at the key factors that make insurance quotes differ.
The Role of Car Value
The value of your car is the biggest driver of your insurance premium. A brand-new 2025 Toyota Camry, for example, might retail for $30,000, while a 2018 model could be worth $15,000. If your new Camry gets totaled in an accident, the insurer has to cough up more to replace it. That’s why comprehensive and collision coverage—common for new cars—tend to cost more.
Used cars, on the other hand, are generally cheaper to replace or repair, which can lower your premium. But there’s a catch: if your used car is too old, insurers might see it as riskier due to potential mechanical issues or outdated safety features, which could nudge your rates up.
Featured Snippet Tip: The primary reason insurance quotes differ for new vs. used cars is the vehicle’s value. New cars cost more to replace or repair, leading to higher premiums, while used cars are cheaper but may carry risks like outdated safety features.
Repair Costs and Technology
New cars are packed with fancy tech—think adaptive cruise control, lane-keeping assist, and touchscreen infotainment systems. While these features make driving safer and more fun, they’re expensive to fix. A fender-bender that damages a new car’s radar sensor could cost thousands, pushing up insurance costs.
Used cars, especially older models, often lack these high-tech systems, so repairs are usually cheaper. For instance, replacing a bumper on a 2015 Honda Civic is far less costly than fixing one on a 2025 model with embedded sensors. However, if your used car is a luxury model, like a 2017 BMW 3 Series, repair costs can still be steep due to premium parts.
Real-Life Example: Sarah’s Story
Let’s meet Sarah, a 30-year-old teacher from Austin, Texas. Sarah was torn between a new 2025 Hyundai Tucson ($28,000) and a used 2020 model ($18,000). She got insurance quotes for both. For the new Tucson, her annual premium was $1,800, largely because of the higher replacement cost and advanced safety tech. The used Tucson? Just $1,200 a year, thanks to its lower value and simpler systems. Sarah ultimately chose the used model, saving on both the car and insurance.
Key Factors That Influence Insurance Quotes
Beyond the car’s value and repair costs, insurers look at several other factors when quoting premiums for new and used cars. Let’s unpack these to see how they tip the scales.
Safety Features
New cars often come with cutting-edge safety features like automatic emergency braking, blind-spot monitoring, and rearview cameras. These can lower your premium because they reduce the likelihood of accidents. According to the Insurance Institute for Highway Safety (IIHS), vehicles with advanced driver-assistance systems (ADAS) can reduce crash rates by up to 20%.
Used cars, especially those over 10 years old, might lack these features, which could lead to higher premiums. However, some newer used cars (say, from 2018–2022) may still have decent safety tech, helping keep costs down.
Depreciation and Coverage Types
New cars depreciate faster than used ones. A new car can lose 20–30% of its value in the first year, which affects how much insurers pay out in claims. Because of this, new car owners often opt for comprehensive and collision coverage to protect their investment, driving up premiums.
Used cars, already depreciated, might not need full coverage, especially if they’re worth less than $5,000. Many owners of older cars stick with liability-only coverage, which is cheaper but offers less protection. For example, John, a 45-year-old mechanic from Chicago, drives a 2010 Ford F-150 worth $4,000. He pays just $600 a year for liability-only insurance, compared to $1,500 for full coverage on a new 2025 F-150.
Driver Profile and Location
Your driving record, age, and location also influence quotes, regardless of whether your car is new or used. A 25-year-old with a clean record in a small town will pay less than a 19-year-old with a speeding ticket in a big city. For instance, urban areas like Los Angeles have higher rates due to traffic, theft, and accident risks.
Expert Insight: “Your car’s age and value are just part of the puzzle,” says Emily Carter, an insurance agent with 15 years of experience. “Insurers also factor in your driving history and where you live. A new car in a high-risk area will always cost more to insure than a used one in a quiet suburb.”
New Cars: Why Are They More Expensive to Insure?
Let’s zoom in on new cars. They’re sleek, modern, and loaded with features, but those perks come with a higher insurance bill. Here’s why.
Higher Replacement Costs
As mentioned, new cars cost more to replace. If your 2025 Tesla Model 3 ($40,000) gets totaled, the insurer is on the hook for a big payout. This makes comprehensive and collision coverage pricier. Data from the National Association of Insurance Commissioners (NAIC) shows that comprehensive coverage for new cars can be 20–30% higher than for used ones.
Financing and Lease Requirements
If you finance or lease a new car, lenders usually require full coverage to protect their investment. This means you’re locked into paying for comprehensive and collision, even if you’d prefer cheaper liability-only coverage. For example, Maria, a 28-year-old graphic designer, leased a 2025 Mazda CX-5. Her lender mandated full coverage, resulting in a $2,000 annual premium—much higher than she’d pay for a used car with liability only.
Advanced Tech, Higher Repair Bills
New cars’ high-tech systems are a double-edged sword. They make driving safer but jack up repair costs. According to AAA, repairing a new car’s advanced safety systems can cost 2–3 times more than fixing older models. A cracked windshield with a built-in camera? That’s $1,500, not $300.
Used Cars: Why Are They Often Cheaper to Insure?
Used cars generally have lower insurance costs, but it’s not always a slam dunk. Let’s explore why they’re often the budget-friendly choice—and when they’re not.
Lower Value, Lower Premiums
Since used cars are worth less, insurers pay out less in claims, which translates to lower premiums. A 2016 Nissan Altima valued at $10,000 is far cheaper to insure than a 2025 model at $25,000. According to Progressive, liability-only coverage for older cars can cost as little as $400–$600 a year in some states.
Flexibility in Coverage
With a used car, you have more freedom to skip comprehensive and collision coverage, especially if the car’s value is low. This can save you hundreds annually. However, if your used car is still valuable (like a 2020 Audi Q5), you might want full coverage, which could rival new-car rates.
Potential Downsides
Older used cars (pre-2010) can sometimes cost more to insure if they lack modern safety features or are prone to breakdowns. Insurers may also charge more for high-risk models with poor safety ratings. For example, a 2008 Dodge Charger might have higher rates than a 2018 Toyota Corolla due to its crash-test scores.
Featured Snippet Tip: Used cars are often cheaper to insure because they have lower replacement values and don’t always require comprehensive or collision coverage. However, older models with outdated safety features may carry higher premiums.
How to Save on Insurance for New or Used Cars
Whether you’re driving a new or used car, there are ways to keep your insurance costs in check. Here are some practical tips:
Shop Around for Quotes
Don’t settle for the first quote you get. Compare rates from at least three insurers—Ge personally saved $300 a year by switching from Allstate to Geico for his used 2019 Subaru Outback. Online tools like The Zebra or NerdWallet make this easy.
Bundle Your Policies
Bundling auto and home (or renters) insurance can save you 10–20%. For example, Lisa, a 35-year-old nurse, bundled her new 2025 Honda CR-V’s insurance with her homeowners’ policy and shaved $200 off her premium.
Ask About Discounts
Insurers offer discounts for safe driving, good credit, low mileage, or installing anti-theft devices. New cars with advanced safety features often qualify for tech-related discounts, while used cars might earn low-mileage breaks if you don’t drive much.
Raise Your Deductible
Increasing your deductible (the amount you pay out of pocket before insurance kicks in) can lower your premium. Just make sure you can afford the higher deductible if you need to file a claim.
Expert Tip: “Always ask your insurer about discounts you might qualify for,” says Carter. “Many drivers miss out on savings simply because they don’t know what’s available.”
New vs. Used: Which Is the Better Deal?
So, which is the smarter choice—insuring a new car or a used one? It depends on your budget, driving habits, and priorities. New cars offer peace of mind with warranties and safety tech but come with higher insurance costs. Used cars are generally cheaper to insure but may lack modern features or require more maintenance.
Let’s revisit Sarah, our teacher from Austin. By choosing the used 2020 Hyundai Tucson, she saved $600 a year on insurance and avoided the steep depreciation of a new car. But for someone like Maria, who loves the tech and reliability of her leased Mazda CX-5, the higher insurance cost is worth it.
Data Point: According to a 2024 study by ValuePenguin, the average annual insurance cost for a new car is $1,900, compared to $1,400 for a used car—a 26% difference.
FAQs About New vs. Used Car Insurance
Why is insurance more expensive for new cars?
New cars have higher replacement and repair costs due to their value and advanced technology, leading to pricier premiums.
Can I get cheap insurance for a used car?
Yes, especially if you opt for liability-only coverage and the car has a low value. Shopping around and claiming discounts can further reduce costs.
Do safety features lower insurance rates?
Yes, features like automatic braking and lane assist can reduce premiums by lowering accident risks, especially on new cars.
Should I get full coverage for a used car?
It depends on the car’s value. If it’s worth less than $5,000, liability-only coverage might suffice. For pricier used cars, full coverage could be worth it.
Conclusion
Understanding how insurance quotes differ for new versus used cars can save you hundreds—if not thousands—of dollars over time. New cars come with higher premiums due to their value, tech, and financing requirements, while used cars are often cheaper but may carry risks if they’re too old or lack safety features. By shopping around, leveraging discounts, and choosing the right coverage, you can find a policy that fits your budget and keeps you protected on the road.
Ready to get started? Grab quotes for your dream car—new or used—and see how much you can save. Have a story about insuring your car? Share it in the comments below!