Why Selling a Car Could Cost You Money

Your insurance bill may increase even with fewer vehicles

Beth Braverman,

AARP

Comments

Published April 01, 2026

an illustration shows a man with a for sale approaching a car in his driveway

Selling one of your cars? Your auto insurance bill could go up.

Zohar Lazar

If you’re looking to trim expenses, selling one of your cars and then dropping it from your insurance policy may seem like a no-brainer. But you might get an unwanted surprise: Your auto insurance bill could go up.

The unexpected increase is especially worth looking out for in retirement, when couples sometimes downsize from two cars to one.

“It’s a very frustrating situation,” says Kaz Weida, who writes about insurance for NerdWallet. “Obviously you’re insuring fewer cars. Why are you not spending less money?”

The dynamic at work here is statistical probability. The car you’re dropping from the policy is likely of lower value than the one you’re continuing to insure. So to the insurance company, a higher-value vehicle is being driven more and has a greater chance of getting into an accident, Weida explains. That can lead to a higher premium, especially in cases where there’s a large disparity in car values. Weida adds that the loss of a multicar discount can also be a contributing factor.

What you can do

Call your insurance company before selling. Rather than simply expecting rate relief, contact your insurer to run the numbers and find out for certain. This call also serves as an opportunity to go over any other changes that could lower your rate, including if you’ve recently retired and stopped commuting every day, says Laura Longero, editor in chief at CarInsurance.com.

Shop around. Don’t assume that you’re going to get the best rate from your current provider. Among car insurance customers who switched carriers last year, more than 60 percent were able to cut their annual bill by at least $100, according to a LendingTree survey.

Most Popular

Take advantage of discounts. Many insurers offer multipolicy discounts, which lower your premiums if you use the same company for homeowners or renters insurance and your car. You may also be eligible for a senior discount or get a rate cut for taking a defensive driving class such as the AARP Smart Driver course (aarpdriversafety.org). “Just be open and ask your insurer what discounts you qualify for,” says Erika Tortorici, owner of Optimum Insurance Solutions, an independent brokerage in the Boston area. “They’ll always give you ways to save.”

Boost your deductible. Increasing your comprehensive insurance deductible from $100 to $500 (while maintaining a $500 collision deductible) could lower your annual full-coverage premium by an average of nearly $500, per a Bankrate analysis. If you go this route, consider setting aside the savings in an emergency fund earmarked for your out-of-pocket costs in case of a collision.

Scale back your coverage. Look through all the features of your current insurance policy to see whether there are services or benefits you could eliminate. For example, you may not require a rental if your car ends up in the shop, or you may already receive roadside assistance service from another provider. “Get rid of the bells and whistles,” Longero advises.

Explore telematics insurance. If you’re a safe driver, installing a telematics app — which tracks an individual’s driving habits such as speed, braking force and phone use — could net you additional savings. While younger drivers saw the biggest discounts, a Consumer Reports survey found that people in their 60s saved $115 per year using such an app, and those 70 and older saved more than $90 annually.

Consider keeping the second car. If you own it outright and carry liability-only insurance on your spare car, it may make financial sense to keep it. Compare the potential insurance-cost increase to the expected maintenance costs, Longero says.

%{postComment}%

Beth Braverman is a contributing writer who has covered shopping and personal finance for more than a decade. Her work has appeared in Consumer Reports, CNNMoney.com, CNBC.com, and dozens of other outlets.