YOU’RE thinking about purchasing a new or used car, but don’t forget you’ll need to get a good price for car insurance.
It should be easy, but the world of car insurance can be confusing. Why can it be cheaper to insure a new car than an older one? Why do you pay more for insurance in certain postcodes? Why has my premium gone up?
We’re going to explore some of these questions in this guide, including the big one: Is it cheaper to insure a used car? (Yes, but it depends on a lot of factors!)
Thankfully, the team at Sun Motors can help provide answers and insights, giving you the power to get the best premium.
(Before we start, some people ask do I need insurance before buying a used car? The answer is no. However, once you’ve bought the car and want to drive it, you will.)
What is used car insurance?
Car insurance protects you and your car in the event you are involved in an accident.
Depending on the nature of any accident or incident, the insurance company should take care of your damaged car.
You’ll either get it fixed or, if it’s deemed beyond economical repair, you’ll get the cash to buy a replacement.
If the crash was your fault, they’ll pay for the other person’s car or vehicle to be fixed, too.
Used car insurance is the same as any car insurance product.
Is it cheaper to insure a used car?
On the face of it, insuring a used car should be cheaper, right?
In fact, your insurance premium is a personalised calculation that depends on a whole range of factors.
Vehicle type, size and age will have an impact on your insurance. Other factors will also affect the final price, including where you live, your driving history and your job.
We explore these in more detail below.
Do used cars have different insurance policies?
There are three types of used car insurance:
- Third-party: Covers damage to other people and their vehicles, but not yours.
- Third-party fire and theft: The same as above, but covers you if your car is stolen or damaged by fire.
- Fully comprehensive: Includes everything in the first two, but you also get covered for damage to your vehicle, even if you caused the accident.
You can choose which of the levels of cover suits you and your car. Third-party (including fire and theft cover) are cheaper than fully comprehensive cover, but the risk is higher.
If you’re in an accident that you caused, you won’t get a penny. The small savings every month could leave you seriously out of pocket if you are involved in an accident.
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Factors that may affect the cost of insurance
Insurance companies are secretive about the ways that they calculate your premiums.
They’re private businesses, so that’s up to them, but here are some of the factors that could affect your premium or renewal price:
Vehicle value
It stands to reason, but the more expensive your car is to buy, the higher it costs to insure. That’s because insurers factor in the replacement cost when calculating your premium, says Comparethemarket.
Vehicle model
The model will also impact the price of your premium. Sportier models and those with bigger engines and higher specs will attract higher insurance costs.
It’s all based on the insurance group your vehicle is in. Before you buy, you can check out your car’s insurance group with this checker from Moneysupermarket.
Postcode
Insurers will use your postcode to calculate your insurance cost, assessing things like crime rates, traffic volume, accident history and other claims. The difference can be hundreds or even thousands a year, says Cuvva.
READ MORE BUYING A USED CAR
Driving history
Previous claims and points on your license will make premiums more expensive. Thankfully, 3 points will only add around 5% to your premium, but it gets more expensive to insure your car the more points you have.
Age
Younger people (those aged under 25) will pay much higher premiums, says the Association of British Insurers. Those aged 66-70 will pay the least, it says. It’s all about risk, which is why drivers over 70 can see their premiums start to creep up.
Mileage
The more miles you drive a year, the more likely you are to get into an accident – which is why your premiums will be higher. (The average UK driver does 7,400 miles per year, if you didn’t know.)
Don’t be tempted to underestimate annual mileage, as insurers will use MOTs to check and validate it.
Credit score
A poor credit score and a history of late or missed payments can impact your premium, say insurers Howden.
That’s because most of us pay monthly, which exposes the insurer to risk – which they charge you for.
Occupation
What you do is important to your premium. Insurers will want to know what you do, including whether you use your car for commuting to and from work, says Moneysupermarket.
These are some, but not all, factors that impact your car insurance cost. Remember, it’s vital that you’re honest when arranging insurance.
Don’t be tempted to lie, exaggerate or mislead anyone in your policy application. If you do, you could run into problems if you ever need to make a claim.
What kinds of cars are the cheapest to insure?
You can check the costs of car insurance before buying a used car using online comparison sites.
You can also call up your current insurance provider (if you have one) and ask them for a quote.
What’s the cheapest way to insure a second car?
The cheapest way to insure a used car is to choose a third-party policy. However, the long-term risks (for us, at least) outweigh the small monthly savings you’d make.
Buying a used car? Check out Sun Motors and find your next vehicle today. Whether you’re looking for automatic, manual or electric, use Sun Motors to decide on your next model.
