It depends, but older cars are often cheaper to insure for liability coverage. However, they can be more expensive or even difficult to insure for comprehensive and collision coverage. The savings come from the car's lower market value, meaning an insurance company would have to pay out less for a total loss. But this only applies if you choose to forgo the coverages that protect your own vehicle.
The primary factor is the type of coverage you select. Liability insurance, which is legally required in most states, is typically cheaper for older cars. Since the car is worth less, the potential financial risk you pose to others is also perceived as lower. The real cost difference comes from comprehensive and collision coverage. If your car is older and has a low market value, the cost of these coverages may exceed 10% of the car's value per year. In this case, it often makes financial sense to drop them.
Safety is another critical element. Older vehicles generally lack modern safety features like electronic stability control, advanced airbag systems, and collision avoidance technology. Insurance companies see this as a higher risk for injury claims, which can increase the personal injury protection (PIP) or medical payments portions of your premium.
The table below illustrates how premiums can vary for a driver with a clean record, based on common vehicle examples:
| Vehicle Example | Approximate Annual Premium (Liability Only) | Approximate Annual Premium (Full Coverage) | Key Reason for Cost Difference |
|---|
| 2010 Honda Civic | $450 | $1,200 | Low value makes collision costly relative to car's worth. |
| 2023 Honda Civic | $550 | $1,500 | Higher value and loan requirement necessitate full coverage. |
| 1998 Jeep Wrangler | $500 | $1,800 (if available) | Classic car status and high theft risk can increase premiums. |
| 2023 Tesla Model 3 | $700 | $2,200 | High repair costs and expensive parts drive up premiums. |
Ultimately, the decision hinges on your car's value. A good rule of thumb is if the annual cost of comprehensive and collision coverage is greater than 10% of your car's current market value, it's probably time to drop those coverages and just maintain liability.
