It’s not your imagination. If you’re in your twenties, you really do pay more for certain things than older generations.
Average rents, college education, health insurance and even tickets to shows all cost more than they did for previous generations.
Auto insurance rates have gone up for everyone, but if you’re under 25 and looking for a policy, the chances are you’ll pay some of the highest rates.
The only silver lining? These higher premiums won’t last forever.
So when does car insurance go down – and what can you do about it in the meantime?
When does car insurance go down?
Let’s dig in deeper to understand how premiums tend to change during drivers’ 20s. While average car insurance rates don’t tell the whole story, they can point to trends in what groups may pay more or less for insurance.
According to one study, the average six-month premium for teens who are on their parents’ insurance started at $2,617 for 16-year-olds. The cost dropped every year, down to $2,037 for 19-year-olds.
There’s also a big jump once drivers are outside their teens. Rates then continue to decrease each year but actually start leveling out once drivers turn 25.
Why younger drivers pay more
According to the National Highway Traffic Safety Administration, drivers ages 15-20 were most likely to be involved in speed related fatal crashes compared to other age demographics.
“The data is clear that young drivers file more claims,” says R.J. Weiss, CFP®, who has worked in the auto insurance industry for over 10 years and is the founder of The Ways To Wealth, a financial planning website.
“It’s at age 25 when insurance companies have found that the risk of filing a claim goes down because of driving experience.” As a result, there are less drastic price decreases during the second half of your 20s.
What age does car insurance go down?
Turning 25 can have an immediate impact on some driving-related costs. For example, you might be able to rent a car without paying an additional “young driver” fee. But it’s not so straightforward with insurance rates.
“It’s around the age of 25 when age starts becoming less of a factor in determining one’s rate,” says Weiss. “However, it’s no guarantee that your rates will go down as there are many other factors involved.”
So, while averages tell a fairly straightforward story, your specific situation could lead to variations. For example, if you’ve recently been involved in an accident or received several tickets, those factors could outweigh an age-related discount.
What else can affect your premiums?
Your auto insurance premium can vary depending on all sorts of things, including:
- Your driving record
- Where you live
- The vehicle you’re insuring
- How often and where you drive
- Coverage types and limits
- Insurers’ discounts
- Your credit history, gender and marital status
Each of these factors (and potentially a few others) can lead to higher or lower insurance rates. All else equal, teen drivers will almost certainly pay more due to their age, but once you’re in your 20s, there could be more nuances at play.
In your 20s? It’s time to shop for auto insurance
While you should expect a lower rate by the time you turn 25, relative to earlier in your twenties, this doesn’t happen by default from your 25th birthday.
Shopping around could find you a lower rate, even if you’re under 25 – especially if you have a good driving record.
“Some companies may start dropping rates at 23 for a certain type of demographic,” says Weiss. “For example, those with a good driving record, with a college degree, in an urban area.In my experience as an independent agent, most insurance companies do not lower your rates at 25.”
While some insurers may not like covering young drivers and decline them or only offer them especially high rates, there is an upside to this.
As you get older there are more companies that want to insure you – meaning the competition for your business goes up, potentially putting you in a better place to get a lower premium.
“As you get older, you open yourself up to being able to compare quotes from more companies, which gives you a great chance to save,” says Weiss.
Shopping around = lower rates
Because you may have more options open to you once you’re over 25, shopping around will help you find the lowest rate you can.
Doing your research is pretty much top of any list of tips for saving on insurance. Now that you can include companies that may not have offered you a reasonable rate in the past, you’re in a stronger position.
If the thought of shopping around and talking to lots of insurance companies doesn’t sound like something you want to do, the Cover app can help remove the hassle.
Answer a few questions through the Cover app, and we’ll send you the best price we can in minutes.
Don’t be put off by the idea of the hassle of switching car insurance companies. As long as you follow a few easy steps, it’s pretty straightforward.
Get your discounts
Be sure to look for discounts and savings opportunities that you may be newly eligible for during your 20s:
- A good student discount for maintaining good grades (such as a 3.0 or higher) during college. However, this may only be available if you’re still under 25 years old.
- Look for discounted rates for association members, such as an alumni association, fraternity, sorority, or through your employer.
- Complete a defensive driving course.
- Understand the different types of auto insurance coverage and only pay for what you need.
- If you have renters, homeowners or life insurance, see if you can get a multi-line discount for buying several policies from the same company.
- Let your auto insurance company know if you get married, as single people may pay higher premiums.
- Consider an insurer that has a telematics program, if you’re generally a cautious driver or don’t drive many miles each year.
- While it isn’t a discount, the level of deductible you choose also affects what you pay for insurance. Choosing a policy with a higher deductible will lower your premiums. The tradeoff is that if you make a claim, you pay a higher amount out of your own pocket before the insurance company pays the claim.
Ultimately if you’re wondering why your insurance is expensive, age could be a factor, but it might not be the only one.
But by shopping around and maximizing your discounts, you should be in a better position to save on your auto insurance.
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