To calculate the rate of your insurance, insurance companies take a look at a number of different factors such as the age of the car. It is typically cheaper to insure a used car as they are far less valuable than a new one. They also do not come with the same high tech safety features as a new car does. Insurance prices can, however, vary widely between a new and a used car. Herein, we take a look at the difference in the cost of insurance between a new and a used car.

Value of the car
A 2012 Honda Civic has a much lower value than a 2018 Honda Civic, simply due to depreciation. The insurance company has a lower liability when your car is less valuable. Repairing an older vehicle might cost the same amount of money, but an insurance company is only liable to cover the replacement value of your vehicle. When the repairs on the used car exceed the replacement value of the car, it is just easier to “total” the car.

Drop comprehensive and collision coverage
When driving a used car, you can afford to drop the comprehensive and collision insurance from your insurance policy and still be comfortable with it. You can also afford to just get the basic liability insurance without paying a high monthly premium. This comes from the simple fact that if you get into a collision with a used car, it is just not worth spending a lot of money to get the car repaired. Your monthly insurance premium can be cut into half just by dropping collision and comprehensive coverage from your insurance policy.

New cars are more expensive to repair
As new cars are more valuable than used cars the insurance company is held responsible for covering repairs up to a higher amount. Newer cars are also equipped with the latest high tech safety features like automatic braking system and backup cameras, which can help to reduce the risk of accidents quite significantly. One would, therefore, assume that this would lead to cheaper insurance costs, but that is however not the case, as these new safety features can also be quite costly to repair and replace. A damaged automatic braking system in a fender bender might cost your insurance company thousands of dollars to replace.

Used cars are becoming more reliable
Although buying a new car is considered cool, cars are built to last and used cars are getting to be more reliable than before. A used car can run up to 100,000 miles or more before needing any major repairs. If you are on a budget, then a used car is God sent as it is cheaper to insure. Hence it is a double jackpot, as you save money when you buy the car and you save money when you insure the car as well.