The Best Car Insurance Companies for Drivers Under 25
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There’s nothing quite like the freedom and accomplishment you feel when you first get your driver’s license. And nothing so deflating as when you realize how expensive it is to buy car insurance when you’re under 25. But don’t despair, young one! We’ve provided all the information you need to understand
- How much you can expect to pay for your policy
- Why car insurance is so expensive for drivers under 25
- Which companies offer the best discounts
- How to set up your policy for savings
By the end, you should have a solid foundation of car insurance knowledge and understand how to find a cheap car insurance policy. Let’s get started.
- Auto insurance is most expensive for drivers under 25, with teen drivers paying the most on average for a policy.
- Average rates for drivers under 25 range between $227 for new drivers and $131 for more experienced drivers in their early 20s.
- The cheapest car insurance for drivers under 25 depends on the driver’s record, vehicle, location, and other factors.
- Young adults don’t have access to as many discounts as older drivers, but they can still save money by completing a defensive driving course and participating in a telematics program.
- If possible, younger drivers can save money by staying on their parent’s policy and opting to drive an older vehicle valued at less than $5,000.
How Much is Car Insurance For Drivers Under 25?
Drivers under 25 should expect to pay premiums between $131 and $227 per month, according to our research. That means drivers under 25 pay the highest premiums compared to older drivers with similar driving records, vehicles, and locations.
Your rate will depend on a number of factors, including your
- Age: Younger drivers pay more than older ones
- Vehicle: Cheaper cars cost less to insure
- Driving history: Drivers with clean records pay less
- Location: Average premiums are more expensive in areas with high population density
- State Regulations: Some states’ car insurance rules make policies more expensive
- Marital Status: Married couples tend to pay less than unmarried drivers
- Gender: Female drivers typically pay less than male drivers
The best way to know how much you’ll pay is to compare auto insurance rates with several insurers before you buy. Already insured? You can often switch to a cheaper car insurance policy without penalty.
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Why is Car Insurance so Expensive for People Under 25?
Auto insurers base their pricing on how likely a driver is to get into an at-fault accident. Insurers label anyone who seems likely to make a claim “high-risk” and will charge them more. That’s because insurance companies lose money when drivers make claims. To ensure the company stays solvent (i.e., doesn’t payout more than the company takes in through premium payments), insurers charge higher premiums for high-risk drivers.
Now that you know that, let’s talk about how age factors in. Statistically speaking (and insurers are very fond of statistics), drivers younger than 25 are more likely to get into a car accident than older drivers. According to the CDC, Teen drivers have the highest risk of being involved in a motor vehicle crash. Nearly 2,400 teens died in 2019 from car accidents, and 258,000 teens were injured.
How Does My Age Affect Car Insurance?
As you age, your car insurance premiums will become more affordable. That’s because you gain experience behind the wheel and, statistically speaking, are less likely to cause an accident. So, 20-year-old drivers pay less than teens, and 25-year-old drivers pay less than drivers in their early 20s. As long as you keep a clean driving record, your rates will decrease each year you drive.
When you turn 25, your insurance premiums should start to fall even faster. By the time you hit your thirties, your rates won’t change dramatically from birthday to birthday. Instead, how much you pay takes a slow-but-steady decline for several decades. Different factors can increase your rate, such as driving a more expensive car or receiving a few tickets, but overall you’ll pay less for the same policy when you’re an older, more experienced driver.
This trend reverses when you hit your mid-seventies. Drivers 75 and older are also more likely to cause an insurance claim. Even so, elderly drivers are statistically safer on the road than drivers under 25, according to the Insurance Information Institute.
What are the Best Car Insurance Companies for Drivers Under 25?
What makes an insurance company good for drivers under 25? First, it should offer discount programs that drivers in this age group can access. Second, it should make it easy to purchase a policy and make monthly payments. That way, young drivers never have a lapse in coverage. Lastly, it should make it easy for policyholders to access their insurance card remotely, especially via a mobile app. That way, drivers have their insurance card when they need it.
Luckily, there are many insurance companies that hit all three marks. Here are ten of the best-known providers to get you started:
Your job is to decide which company best fits your needs and your budget. Keep in mind that you may find a better rate with a smaller insurance company. While most companies listed above are national brands, many smaller insurers offer competitive rates and technology (e.g. mobile app). So don’t be afraid of choosing a regional insurer if they offer you the best policy.
At the end of the day, the best way to ensure you’re getting the best rate is to compare rates from as many different companies as possible. Luckily, sites like Compare.com bring the companies to you, so you don’t have to jump from website to website getting quote after quote. Just enter your ZIP below, answer a few questions about you, your vehicle, and your insurance and driving history, and you’ll get free quotes from up to 70 of the nation’s top companies.
See How Much You Can Save on Your Car Insurance
See How Much You Can Save on Your Car Insurance
How Can Drivers Under 25 Save on Car Insurance Policies?
Although you might be thinking there’s no way to find affordable car insurance when you’re under 25, we’re here to tell you it is possible. Not only that, there are plenty of tried and true ways to keep the cost of car insurance low. Here are our top tips.
Try Usage-Based Insurance (UBI)
Usage-based insurance policies charge you based on your driving habits. There are two types of UBI policies: pay-per-mile and pay-how-you-drive.
Pay-per-mile auto insurance policies are priced based on how much you drive. The more miles you put on the road, the more expensive your premium.
Pay-how-you-drive policies are priced based on your driving habits. With these plans, insurance companies track the dates and times when you’re on the road, how often you break hard, your average speed, and more.
Companies like Metromile offer pay-per-mile insurance policies and have risen in popularity since the COVID-19 pandemic. But usage-based programs have been around for some time.
Many large car insurance providers offer separate products for drivers looking for UBI policies. Typically, you’ll need to purchase your policy through the UBI arm of the company, as opposed to purchasing a regular policy and using a telematics discount program. But, both options can work well for younger drivers.
Pay-per-mile policies are a good fit for people who drive fewer than 8,000 miles per year. So college students and those who work from home are well suited to find low rates. Pay-how-you-drive policies are a good option for anyone who’s committed to practicing safe driving habits.
Use Discounts Like There’s No Tomorrow
The truth about discounts for drivers under 25 is that there aren’t many. But don’t let that discourage you. There are several valuable discounts that many insurers make available to drivers in your age group.
- Good Student Discount: If you are in high school or college and maintain good grades (a B average or better), you can access this discount of five to 15% off your insurance.
- Defensive Driving Course: If you take an inexpensive driver class (make sure it’s approved by your insurer) you can earn as much as 20% off your premiums.
- Telematics Program: If you agree to allow your insurer to monitor your driving habits, you can get deep discounts for years. Simply install a device in your car or app on your phone, practice safe driving, and voila! Up to 30% off your insurance rate.
Beyond these three, you can get smaller discounts for car safety features, anti-theft devices, going paperless, and setting up auto pay. You’re allowed to combine your discounts to get the lowest rate possible.
Other discounts, like multi-car and bundling insurance policies, tend to be more difficult to access when you’re under 25. But that’s only because young drivers are less likely to have multiple cars or other insurance products like homeowners insurance. This brings us to the next tip…
Stay on Your Parent’s Insurance Policy
Your parent, guardian, or older sibling is more likely to have access to discounts traditionally out of reach to drivers in your age group. That means that you could potentially save a lot of money by combining your policy with theirs.
Of course, this isn’t an option for everyone. And you don’t want to join policies with drivers who have issues with their driving record, as that could mean higher rates for you.
Keep in mind that insurance companies often require that everyone covered by an auto insurance policy live under the same roof. This may vary if you live away from home for college or in other circumstances. So, be sure to check with your insurer before combining policies if you don’t live together.
If neither of these options work for you, don’t worry. There are still several ways to lower your rate.
Increase Your Deductible(s) to a Reasonable Level
Your deductible is the amount of money you pay out of pocket in the event of a claim. Let’s say your car is damaged when you accidentally back into a light pole. The cost to repair the rear end of your car is $1,600, and your deductible is $500. You must pay your $500 deductible before your insurance company will cut you a check for $1,100.
As you can see, your deductible amount affects the financial responsibility of your insurance company. The lower your deductible is, the higher your insurer’s financial responsibility. The higher your insurer’s financial responsibility, the more you’ll pay for your insurance premiums. If you lower your insurer’s financial responsibility by choosing a higher deductible, you’ll receive a lower rate for your policy.
That being said, here are a few things to keep in mind regarding your deductible:
- Be sure you have emergency money stashed away to cover your deductible. Otherwise, if you have to file a claim and can’t afford to pay the deductible, your insurance company won’t contribute to any costs associated with the accident.
- Do your best to avoid making small insurance claims, as any claim can raise your rate and cost you more in the long run. If the repair will cost less than your deductible, there’s no need to file.
- You can choose different deductible levels for different parts of your insurance coverage. For example, you can choose a high deductible for comprehensive coverage and a low deductible for personal injury protection.
Adjusting your deductible levels is a powerful way to lower your car insurance rate. But there are other ways to get the cheapest premium.
Remove Unnecessary Coverage from Your Policy
Everyone needs liability coverage. When we talk about “state minimum coverage,” we’re typically referring to liability coverage — bodily injury and property damage. In addition to liability insurance, you also have the option to purchase collision and comprehensive coverage.
Collision coverage pays for damages to your vehicle due to an at-fault car accident. Comprehensive coverage will cover damages to your vehicle that result from non-collision events. Think hail damage, fallen tree branches, and the like.
When your policy includes liability, collision, and comprehensive coverage, it’s sometimes called full coverage insurance. A full coverage policy costs more than your standard liability insurance plan..
Full coverage policies are usually optional (so long as you don’t have a car loan), which means you can drop additional coverages if you don’t need them. While vehicles five years or younger often need additional coverage, older vehicles are less likely to require collision or comprehensive coverage.
As a general rule of thumb, vehicles worth less than $5,000 don’t need collision and comprehensive coverage. And this brings us to our next point…
Choose a Car that’s Less Expensive to Insure
While a new car is dreamy, it’s also going to cost a lot more to insure than an older one. That’s because a new car costs more to repair or replace than a car valued at $5,000 or less. So, if you can, drive a vehicle that’s older and owned outright (no car loan). Not only will you save money by not having a car payment, but you can also switch to a liability-only policy.
There are many safe and reliable used cars that you can purchase for less than $5,000. According to Kelly Blue Book, the following cars are both reliable and inexpensive:
- 2011 Hyundai Accent
- 2011 Kia Rio
- 2011 Nissan Versa
- 2009 Nissan Sentra
- 2008 Mazda 6
- 2008 Ford Focus
- 2006 Honda Civic
- 2005 Toyota Corolla
- 2005 Honda Accord
- 2005 Toyota Camry
Remember that Your Clean Driving Record is Your Golden Ticket
So far, we’ve focused on how you can set up your policy for savings. Though that’s an important piece to the puzzle, all would be for nothing if you weren’t protecting your driving record. A clean driving record is one that’s free of citations (aka tickets) and claims. Speeding tickets, failure to stop, and other “minor” driving infractions may not seem like a big deal. But those incidents can mean the difference between paying $100 a month and $300 a month for auto insurance. Over 3-5 years, that really adds up!
Drivers with serious tickets, such as a DUI, pay the highest rates. In the worst cases, drivers may not be able to find an insurer willing to write them a policy. Long story short: always follow the law and practice good driving habits. Doing so will pay off for years to come.
Take Care of Your Credit Score Too
It may come as a surprise, but in most states, auto insurance companies can use your credit score to determine your rate. Drivers with good credit pay less than those with a poor credit score. Of course, cheap auto insurance isn’t the only payoff. You’ll also get better lending rates, larger lines of credit, and more negotiating power on lending terms.
You can start building your credit by making bill payments on time, using a preloaded credit card, or being added as an authorized user on a parent’s credit card. Maintain your credit score by making payments on time and practicing good financial habits. Many financial institutions also offer free credit score monitoring services to help you track your progress.
Cheap Car Insurance is Possible for Drivers Under 25
It may seem like auto insurance companies aren’t willing to offer affordable rates to young adult drivers. But that’s not entirely true. Setting up your policy for savings, maintaining a clean driving record and good credit score, and driving an older vehicle are great ways to save money. But the final piece to the puzzle is comparing car insurance quotes before buying.
Every driver is different, and it’s hard to know which car insurance provider will offer you the best policy for a low rate . That’s why comparing insurance prices is so important. Compare.com can help — use our simple form to receive quotes from the best insurance companies in your area. Start with your ZIP code, find your lowest rate, and end with the perfect policy.
Whether you’re a first-time driver, a full-time student, or buying your own car insurance for the first time, we can help you understand the full range of options available. All you have to do is choose the auto insurance policy that best fits your needs.
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Get the Best Price on Your Auto Insurance
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