The car’s age impacts auto insurance costs, with older cars generally being cheaper to insure as they depreciate. As a car’s value decreases, the insurance company faces a lower potential payout in an insurance claim, so the premium decreases. Newer cars have higher repair costs and more features that increase insurance prices.
But there are exceptions—if the car is financed, the lender may require full coverage insurance to offset any savings. Understanding these factors will help you make informed decisions when buying a car and choosing the right types of coverage.
Is Car Insurance Cheaper for Older Cars?
Car insurance costs for older cars go beyond depreciation. Newer cars have higher premiums because they’re worth more and cost more to repair, but older cars don’t always have cheaper rates.
Depreciation plays a significant role in car insurance rates. Since an older car is worth less, the insurer pays out less in a total loss, so the insurance premium goes down. The premium drops around 10% after the first year of the car’s life as the value declines. However, not all old cars benefit from lower auto insurance rates. Cars that hold their value or have expensive replacement parts can still be costly to insure, especially if the parts are rare or hard to find.
Newer cars come with advanced safety and security features like adaptive cruise control, blind spot monitors, automatic emergency braking, and anti-theft technology. These features prevent accidents and reduce the severity of insurance claims, so newer cars are less risky to insure even though they’re more valuable. Older cars lacking these modern protections may have a higher chance of costly claims, so the premium is higher than expected.
While depreciation lowers car insurance costs for older cars, other factors, such as repair costs, safety features, and insurance company rating structures, can unexpectedly affect premiums.
Why is Car Insurance Cheaper for Older Cars?
Several factors affect car insurance premiums, including depreciation, repair costs, and the type of coverage required. While older cars are generally cheaper to insure than newer ones, there are exceptions.
- Depreciation—A car’s value goes down over time, so the insurer wouldn’t need to pay out as much if it is written off. As replacement costs are lower for older cars, so are the insurance premiums.
- Lower Repair Costs – Older cars are easier and cheaper to repair than newer cars, which often require special parts and advanced technology. Used or aftermarket parts for older cars are also more available, so repair costs are lower.
- Less Coverage Required—If you’re financing a car, the lender will require full coverage. However, once the vehicle is paid off, the owner can opt for state minimum liability coverage, which is much cheaper. Many older cars are fully owned, so their drivers can lower their insurance coverage and premiums.
Why Could Older Cars Be More Expensive to Insure?
While older cars are generally cheaper to insure, there are exceptions:
- Antique or Classic Cars—These cars may require special insurance policies, which can be more expensive than regular coverage.
- Limited Safety Features—Older cars may not have advanced safety features like automatic braking or collision avoidance, making them riskier to insure.
- Expensive or Hard-to-Find Parts—Some older cars, especially rare or discontinued models, may have costly or hard-to-find parts, which makes auto insurance more expensive.
Knowing these factors will help drivers decide on coverage options and car insurance costs when driving an older car.
What Type of Insurance Coverage is Best for Old Cars?
As a car ages and depreciates, its auto insurance needs to change. While liability coverage is required in most states, comprehensive and collision coverage may not be as cost-effective. Knowing which coverages to keep or drop will help you make informed decisions about your older car.
All vehicles must meet state minimum liability insurance requirements regardless of age to be driven legally. These include:
- Bodily Injury Liability – Covers medical expenses and lost wages for others if you’re at fault in an accident.
- Property Damage Liability pays for damage to other people’s property, such as other cars, fences, or buildings.
- Personal Injury Protection (PIP) – Required in no-fault states, covers medical expenses and lost wages for you and your passengers, regardless of fault.
- Medical Payments Coverage (MedPay)—This helps cover medical costs for you and your passengers, regardless of who caused the accident (availability varies by state).
- Uninsured/Underinsured Motorist Coverage – Protects against drivers with little to no insurance.
Optional Auto Insurance Coverage for Older Vehicles
- Collision Coverage – Pays for damage to your car if you are at fault in an accident. If your car is worth little, the cost of this coverage may exceed the payout, so it’s not needed.
- Comprehensive Coverage – Covers non-collision incidents like theft, vandalism, and weather damage. It’s cheaper than collision but may not be worth it if the car costs little.
- New Car Replacement Coverage—Designed for new cars, this coverage is not needed for older cars as it only applies to cars manufactured within a few years.
- Gap Insurance—If you have a loan on your car, this policy pays off the difference between the outstanding loan amount and the car’s value.
A common rule of thumb is the 10% rule. Suppose the combined annual cost of comprehensive and collision coverage is more than 10% of your car’s value. In that case, it may not be worth the money. But if your vehicle is financed, lenders may require full coverage until the loan is paid off.
So, while older cars need less insurance coverage than newer cars, knowing your car’s value, financial situation, and risk tolerance will help you decide what’s best for you.
Ways to Lower Car Insurance Rates for an Older Car
Owning an older car can save you on car insurance, but there are more ways to slice and dice to save even more.
Your driving record, including a history of accidents and traffic violations, is a big factor in calculating your car insurance rates. If you have a clean record, you may get lower rates. You can also save money by:
- Increasing your insurance deductible to lower your monthly payment
- Changing your coverage by removing or reducing comprehensive coverage depending on your car’s value
- Getting quotes from multiple insurance companies to find the best deal
- Asking about discounts for safe driving, bundling policies, or maintaining a good driving record
By trying these tips, you’ll ensure that you’re getting the cheapest insurance for your older car while still getting the amount of coverage you need.
Insuring Older Cars vs Classic Cars
Not all older cars are classic cars, although classic cars are older by definition. An older car is just an older model of an everyday car. A classic car is generally 20 to 30 years old and has a collectible value that exceeds its original sale price. Classic cars are usually muscle cars, hot rods, collector cars, and vintage trucks that have been well-maintained or restored.
Classic car insurance is different from regular car insurance in many ways. The cost of insurance is less than standard car insurance but has mileage restrictions and storage requirements to be eligible.
Classic car insurance policies have standard coverages like liability, collision, comprehensive and uninsured motorist, and specialized options like agreed value, which is a payout amount based on the pre-determined value of the vehicle rather than market depreciation. They may also have spare parts coverage and specialized towing and repair services for classic cars.
Some insurers underwrite their classic car policies, while others partner with specialized insurance providers to offer coverage. Classic car owners can buy through a traditional insurance company or work directly with a specialized provider to get a policy that fits their needs.
Get a Free Car Insurance Quote Today!
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Older Car Insurance FAQs
Is Liability Coverage Enough for an Older Car?
Liability coverage is required in most states regardless of the age of the vehicle. It will pay for others or their property if you cause harm. Whether liability is enough depends on how much risk you are willing to take on not having coverage for your vehicle.
Can I Get Full Coverage for an Older Car?
Yes, full coverage car insurance is available for older vehicles, but whether you need it depends on your situation. Full coverage includes liability, collision, and comprehensive coverage. If your car is not financed or leased, you can have both, one or none.
Your decision should consider the 10% rule (if the annual cost of full coverage exceeds 10% of your car’s value) and your assets. For example, comprehensive coverage may still be a good idea if you live in an area prone to wildlife collisions. Insurance professionals generally recommend full coverage if it’s financially possible.
When Should I Drop Full Coverage on an Older Car?
You may want to drop full coverage when your vehicle is paid off and owned free and clear. But without comprehensive and collision insurance, you would be responsible for the full cost of repairs or replacement if the car is damaged.
Which Insurance Companies Offer the Cheapest Rates for Older Cars?
Car insurance rates vary based on vehicle type, location, driving history, and personal risk profile. While some auto insurers may offer lower average rates for older cars, the cheapest for you will depend on your situation. The best way to find the cheapest is to get quotes from multiple carriers.
Do Car Insurance Rates Get Cheaper as a Vehicle Ages?
Yes. Insurance gets cheaper as a car ages because its value decreases. However, certain classic or modified vehicles—such as exotic cars, hot rods, and muscle cars—may qualify for classic car insurance, which is usually cheaper than standard auto insurance.
Does the Make and Model of an Older Car Affect Insurance Rates?
Yes. Even for older vehicles, specific makes and models have higher repair costs or theft rates, meaning higher insurance premiums. Insurers consider these factors when setting rates.
Which Cars Depreciate the Least?
Typically, a new car loses 10-20% of its value in the first year and 15% annually after that, so after 5 years, it could be worth only 40% of its original price. Some cars, however, depreciate slower. According to Kelley Blue Book, car brands with strong resale value are the Tesla Model X, Ford Bronco, Toyota Tacoma, and Toyota Tundra.
What is the Best Insurance for Older Cars?
The best insurance for an older vehicle depends on several factors: age, condition, usage, and if it’s a classic or standard car. At a minimum, you must meet your state’s liability requirements. If additional coverage is desired, comprehensive and collision insurance are options. To find the best policy, compare quotes from multiple carriers to see which offers the cheapest and best coverage for your older car.
