In general, older cars are cheaper to insure compared to a newer version of the same car. This is largely due to depreciation. After you drive your car off the lot, its monetary value starts to decrease rapidly. Cars lose most of their value within their first year, but the depreciation process continues for around five years. After a year, your car will have lost 20% of its original value. Within five years, that number will fall to around 40%. However, this varies depending on your car’s make and model.
Since cars lose their value as they age, insuring an older car is usually more affordable than insuring an equivalent newer car. Learn how to find affordable insurance and whether you should lower your coverage on that older vehicle.
Why Is Insurance Cheaper for Older Cars?
Typically, it’s cheaper to insure older cars because they’re less valuable, meaning they’ll cost less to repair or replace should you file a claim. Basically, insurance companies are taking on less risk by insuring an older car, as the amount they’ll need to pay in the event of an accident, even if it’s a total loss, is less than the price of repairing a new car.
Do I Need Full Coverage Insurance on My Older Car?
As your car ages (if it is paid off, not financed), you may personally decide that the need for full coverage insurance begins to decrease. Optional coverages, like collision and comprehensive insurance, may not be worth it to you once your car reaches a certain age or monetary value. To help you decide whether to invest in maintaining comprehensive and collision coverage, you can compare the current depreciated value of your car to the combined cost of your comprehensive and collision premiums and deductible. If your car has a lease or a loan, however, you will likely need to keep comprehensive and collision until your vehicle is fully paid off.
What About Classic Car Insurance?
Classic car insurance is different from insurance on an older car. Classic cars are usually defined as cars over 25 years old. Unlike older vehicles, classic cars that are well maintained or restored are worth more than their depreciated value; some of them are even high value and require more comprehensive insurance. Classic car insurance, like regular insurance, is based on the cash value of the car. However, unlike standard insurance, the cash value of the car is agreed upon by the owner of the car and the insurance company. In addition, if the car’s value increases over time, your classic car insurance can accommodate that.
Classic car insurance usually covers collision, comprehensive, and liability insurance. It also helps cover any specialized repairs or parts the car needs. In general, classic cars are more expensive to insure than regular vehicles.
Regardless of your car’s age, if you’re in the market for an affordable insurance policy, The General has you covered. We offer a variety of different coverage options for every budget and driving record. In addition, our high-risk drivers receive the same perks as our other customers, including amazing customer service, flexible payment options and more. Get a car insurance quote in under two minutes and see how much you can save today.