Older cars are usually cheaper to insure, but the savings depend on the car's value, your driving record, and what coverage you choose
Insurance companies base rates partly on how much it would cost to repair or replace your car. A 2008 Honda Civic is worth far less than a 2024 model, so collision and comprehensive coverage — the parts of your policy that pay for damage to your own vehicle — cost less. If you own the car outright and drop those coverages entirely, your bill drops further. Liability coverage, which pays for damage you cause to someone else's car or property, stays roughly the same regardless of your car's age.
The catch: an older car with a salvage title, a history of major repairs, or a model known for expensive parts can cost nearly as much to insure as a newer one. And if you still owe money on the car, your lender requires full coverage, which means you cannot skip the expensive parts even if the car is old.
Key Takeaways
- Collision and comprehensive coverage cost less on older cars because the car itself is worth less, but liability coverage stays about the same.
- Dropping collision and comprehensive coverage on a paid-off older car can cut your premium significantly, but you lose protection if you cause an accident or your car is damaged.
- An older car with a salvage title, flood history, or expensive-to-repair model may not save you money on insurance.
- If you still owe money on the car, your lender requires full coverage, so you cannot lower your premium by dropping those protections.
- Your driving record and location affect your rate far more than the car's age — a clean record on an older car beats a spotty record on a new one.
How a car's value affects what you pay
Insurance companies use the car's actual cash value — what it would sell for today — to set the cost of collision and comprehensive coverage. A 2015 sedan worth $8,000 will have lower premiums for those coverages than a 2023 model worth $25,000. The older car simply costs less to fix or replace.
This is why the biggest savings come when you own the car outright and drop collision and comprehensive coverage. You are no longer paying the insurance company to cover repairs or replacement. You are only paying for liability, which protects the other person if you cause an accident. That coverage costs roughly the same whether your car is five years old or fifteen.
The trade-off is real: if you cause an accident or your car is damaged by weather, theft, or vandalism, you pay for repairs yourself. For a car worth $5,000 or less, many owners decide that risk is worth the savings. For a car worth more, or if you cannot afford a major repair, keeping collision coverage makes sense even on an older vehicle.
When an older car does not save you money
Some older cars cost as much or more to insure than newer ones. A salvage title — issued when an insurance company has declared the car a total loss — raises your rate significantly because insurers see it as higher risk. The same applies to cars with a flood history, even if they have been repaired. Insurance companies track this through the vehicle history report.
Certain older models are expensive to repair because parts are hard to find or labor is costly. A 2010 luxury sedan might have higher collision rates than a 2020 economy car. Check your car's repair costs on the National Highway Traffic Safety Administration (NHTSA) website or ask your insurer directly before assuming age means savings.
Location and driving record matter far more than age. A 25-year-old driver with two accidents in the past three years will pay more to insure a 2005 Honda than a 55-year-old with a clean record will pay to insure a 2022 BMW. Your history and where you live — urban areas with more theft and accidents cost more — override the car's age in most cases.
What happens if you still owe money on the car
If you have a loan or lease on the car, your lender requires collision and comprehensive coverage as a condition of the loan. You cannot drop these to lower your premium. The lender wants to know that if the car is damaged, the insurance will pay to fix or replace it, protecting their investment.
This requirement stays in place until you pay off the loan. Once the car is yours free and clear, you can choose to drop those coverages and lower your bill. Many owners do this once the car reaches a certain age or value, weighing the savings against the risk of paying out of pocket for repairs.
Comparing your options: full coverage versus liability only
The decision to keep or drop collision and comprehensive coverage depends on three things: the car's current value, how much you can afford to pay for repairs, and how much you drive.
If your car is worth less than $5,000 and you have an emergency fund that could cover a major repair, dropping collision and comprehensive might save you $50 to $150 per month. If your car is worth $10,000 or more, or if a $3,000 repair would strain your finances, keeping those coverages is usually the safer choice. If you drive rarely — a second car or weekend vehicle — the risk is lower, which can tip the decision toward dropping coverage.
Run the numbers with your insurer. Ask what your premium would be with liability only, then compare that savings to what you would pay out of pocket if your car needed a major repair. That comparison is more useful than any general rule.
How to lower your premium on an older car
Beyond dropping coverage, several other moves can reduce what you pay. Bundling your car insurance with home or renters insurance often saves 15 to 25 percent. Raising your deductible — the amount you pay out of pocket before insurance kicks in — lowers your premium. Moving from a $500 deductible to a $1,000 deductible can cut your rate by 10 to 15 percent, though you need to be able to afford that deductible if you have a claim.
Installing anti-theft devices, maintaining a clean driving record, and taking a defensive driving course can also lower rates. Some insurers offer discounts for low mileage — if you drive the older car only occasionally, mention that when you get a quote. Paying your premium in full rather than monthly sometimes saves money, and switching insurers every two to three years often reveals better rates than staying put.
Frequently Asked Questions
How old does a car have to be to get cheaper insurance?
There is no magic age. Insurance rates drop gradually as a car loses value. A five-year-old car will have lower collision and comprehensive rates than a brand-new one, but the biggest savings usually come after eight to ten years, when the car's value has dropped significantly. The real savings come when you own it outright and drop those coverages entirely.
Is it cheaper to insure a car that is paid off?
Only if you drop collision and comprehensive coverage. Once you own the car free and clear, your lender no longer requires full coverage, so you can choose liability only. That is when older cars become genuinely cheap to insure. If you keep full coverage, the rate stays about the same.
Will my insurance go down if I buy a 20-year-old car instead of a 10-year-old one?
Probably a little, but not as much as you might think. The difference in value between a 10-year-old and 20-year-old car is smaller than between a new car and a 10-year-old one. Your driving record, location, and the specific model matter more. A 20-year-old luxury car can cost more to insure than a 10-year-old economy car.
What if my older car needs expensive repairs — should I keep collision coverage?
Yes, if you cannot afford to pay for repairs yourself. Collision coverage protects you if you cause an accident. If a $5,000 repair would be a hardship, the monthly premium for collision coverage is worth it. If you have savings set aside for car repairs, dropping it makes more sense.
Does the age of my car affect my liability insurance rate?
No. Liability coverage pays for damage you cause to someone else's car or property, not your own vehicle. It costs roughly the same whether you drive a 2005 or 2025 model. Your driving record and location affect liability rates far more than your car's age.