So you’re shopping for a used car and you’re starting to look at some of the logistics that surround it, including car insurance. Insuring a used car requires a slightly different decision-making process than insuring a new car, but it’s really not that complicated. You just need to understand what the different components of car insurance are, which ones you must have and which ones you could do without as a used car owner.

First of all though, let me tell you that yes, you absolutely need insurance on any car, new or used. It’s the law, and there’s no way around it. However, the most commonly required base level insurance is what is known as liability insurance. Liability insurance covers you against damages that you could be responsible for in the event of an accident. For example, if you hit another person and cause damage, you will be responsible for these damages. With your insurance policy, the insurance company will be able to pay the required parties. This level of coverage is required whether your car is new or used.

Things get a bit more confusing when you get to things like collision and comprehensive insurance. Collision insurance helps repair or replace your car in the event of an accident. Comprehensive insurance covers things like weather damage, theft, vandalism, and more.

So do you need this type of coverage for a used car? It really depends. If you’re driving a clunker, chances are you can do without these, as your premiums are likely to cost you a lot more than it would to simply buy another car after a few years. However, if you drive a newer used car that is only a few years old, these insurance policies can help protect your car against these problems.

In fact, it really is all about your risk tolerance and personal preferences. As long as you have the level of insurance required by law, whether or not you get additional coverage depends on how you feel about taking the risk of replacing the car yourself at the expense of the insurance premium. Many people like to “self-insure” by putting the money they would have spent on additional premiums into a special savings account to repair or replace the car in the event of an accident, theft, or other event.

So, I hope this gives you an idea of ​​what you are looking for in terms of choosing insurance for your used car. If you’re financing your used car, you probably need to fully insure it, but otherwise the decision is really up to you, as long as you meet the minimum legal requirements. Good luck in your decision making and enjoy that money saving used car!