Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 28, 2021

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Insurance Q&A: “Is insurance cheaper for older cars?”

If you’re a driver who is into collecting antique, older vehicles, you may have wondered this from time to time. Even if we’re only talking about older models rather than vintage ones, the answer to this age old question is a big, fat maybe. Glad we could help!

On a serious note, there are a few details we need to discuss in order to give you an accurate answer.

The cost of auto insurance depends on many variables including what insurance company you go through, whether or not you have any sort of discount applied to your policy, and of course what sort of insurance policy you have. The reason why the answer to your question isn’t a yes or no because there isn’t a set average cost.

Read more about how insurance rates are determined if you’re feeling financially frisky and curious.

What is the core of the issue? 

Insurance premiums are based, in part, on the actual cash value of your car. If your car costs more to repair or replace if it’s totaled, your insurance is going to cost more. That’s the bottom line unfortunately.

Put simply, insuring a 2003 Honda Civic will cost less than insuring a 2011 Honda Civic.

Why? The insurer will have to pay a whopping $5,000 if the ’03 model is in a wreck. The same insurer will be on the hook for $22,000 to replace your brand new model. For a classic vehicle, it works more or less the same. However, sometimes there is usually extra coverage you can apply towards a car that is considered vintage, which wouldn’t dull the pain you’d be feeling if anything ever happened to part of your collection, but you’d be financially protected at least.

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What’s the catch? 

While liability car insurance coverage is mandatory in almost every state, you don’t necessarily have to buy a policy that offers full coverage, which costs more.

The extra insurance premium tied to full coverage is based mostly on your purchase of physical damage coverage.

Physical damage coverage includes both comprehensive and collision coverage, and is designed to repair your car in the event it gets damaged in any way.

So it may not make sense to purchase this type of coverage for an older car (should I buy collision insurance on an older car?). The average cost may be more than the car is worth, and if your annual premium is higher for a car that wouldn’t survive an accident, you may be frivolously throwing your money out the window.

But physical damage coverage is mandatory if you lease or borrow money to get your ride, no matter the year or model. And the entity that owns the car will be listed as a loss payee on your policy.

In short, no physical damage coverage, and that means no loan or lease.

[Is insurance higher on a leased car?]

Conversely, if your car is paid off, usually the case if it’s older, you don’t have to purchase physical damage coverage. It’s only if you want the financial protection against any sort of accident or disaster.

This will certainly save you a good bit of money. Just be sure to have an alternate form of transportation lined up in the event of a wreck. Above all else, make sure that no matter the type of car you have, new or old, that you can afford your payments, and that you’re not overpaying.

Read more: When to opt for liability only coverage.