[sam]

Hai,

I am Sam.

Insuring a used car follows the same basic guidelines as insuring a new one, with the owner's goal being to protect himself from liability should something happen to his vehicle, its occupants, or other motorists. The key difference is that if a used car is damaged or stolen and written off as a total loss, the insurer's potential loss is lower than that with a new model, so the company can charge less for the comprehensive and collision coverage, therefore lowering the premium. On the other hand, a used car can inflict just as much damage on other cars, people, structures, etc., as a new one, so liability rates aren't affected by a car's age.

Because used cars are less valuable, buyers may want to rethink some of their insurance strategies. For example, it may not be necessary to maintain high coverage for comprehensive and collision insurance, when ample coverage with lower payouts is available for a smaller premium.

"The major thing to consider is how much physical damage coverage you need on a used car," says Dick Luedke, spokesman for State Farm. "A lot of people with older cars choose not to have a lot of collision coverage."

Likewise, while a low deductible may make sense on an expensive brand-new car, used-car buyers may choose to save money by raising their deductible. Because the vehicle may already have some cosmetic wear and tear, an owner might choose to skip repairing minor collision damage, or simply go out of pocket for smaller repairs, rather than paying the higher premiums a lower deductible commands. Keep in mind, however, that the higher the deductible, the more you'll have to pay out of your own pocket in the event of a claim.

"When you're buying comprehensive and collision coverage, one of the questions you ask is, 'How much should the deductible be?' " Luedke says. "You should ask yourself, 'How much can I afford tomorrow without upsetting my financial comfort zone?' If you can pay $1,000, why pay extra for a lower deductible?"

This is especially typical among used cars, he added. "Higher deductibles are probably more common for an older vehicle for the same reasons as a lower coverage limit." But all insurance is a matter of balancing cost versus risk, and for used cars, many consumers lean toward saving money today at the risk of having to spend more in the event of a claim.

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