Does car insurance go down at 25?

Young adults pay the highest car insurance rates of any group of drivers. If you spend more money on car insurance than you do on your car loan, you're probably wondering when you'll be able to retire. With each year of driving experience, your rates will gradually decrease. The general thinking is that once you reach the age of 25, you will most likely pay a lower premium than you did previously. How much does car insurance cost when you reach the age of 25? It is determined by a number of factors.

Does your insurance go down at 25?

Many drivers believe that their auto insurance rates drop when they reach the age of 25, but this is not always the case. However, age plays a significant role in the insurance premium you will pay. “Generally, once you reach the age of 25, your rates will be a little lower,” said Robert Passmore, assistant vice president of personal line policies at the American Property Casualty Insurance Association. Passmore added that once you reach the age of 30, insurance companies consider you an adult, and your rates will rise again if you keep a clean driving record.

How much does car insurance cost when you reach the age of 25? The table below shows the average annual rates for full coverage and minimum coverage in each state for drivers aged 22 and 25, respectively. As you can see, the cost of auto insurance drops dramatically between the ages of 22 and 25.

State

Average annual full coverage premium for a 22-year-old

Average annual minimum coverage premium for a 25-year-old

Alabama

$2,824

$2,191

Alaska

$2,579

$2,050

Arizona

$2,515

$1,953

Arkansas

$2,987

$2,470

California

$3,225

$2,668

Colorado

$3,093

$2,442

Connecticut

$2,672

$2,074

Delaware

$2,737

$2,175

District of Columbia

$2,921

$2,246

Florida

$3,964

$3,359

Georgia

$3,385

$2,561

Hawaii

$1,216

$1,272

Idaho

$1,843

$1,460

Illinois

$2,473

$1,909

Indiana

$2,137

$1,681

Iowa

$1,973

$1,551

Kansas

$2,691

$2,153

Kentucky

$3,667

$2,852

Louisiana

$4,276

$3,426

Maine

$1,426

$1,107

Maryland

$2,925

$2,209

Massachusetts

$1,716

$1,451

Michigan

$4,106

$3,031

Minnesota

$2,644

$2,011

Mississippi

$2,719

$2,144

Missouri

$2,727

$2,109

Montana

$2,940

$2,094

Nebraska

$2,342

$1,837

Nevada

$3,530

$2,836

New Hampshire

$1,913

$1,512

New Jersey

$2,774

$2,294

New Mexico

$2,262

$1,862

New York

$3,459

$2,779

North Carolina

$1,554

$1,481

North Dakota

$1,984

$1,576

Ohio

$1,920

$1,462

Oklahoma

$2,800

$2,300

Oregon

$2,133

$1,720

Pennsylvania

$2,700

$1,961

Rhode Island

$2,979

$2,324

South Carolina

$2,441

$1,920

South Dakota

$2,496

$2,029

Tennessee

$2,330

$1,792

Texas

$3,048

$2,350

Utah

$2,180

$1,651

Vermont

$1,997

$1,413

Virginia

$2,164

$1,770

Washington

$1,985

$1,544

West Virginia

$2,506

$1,907

Wisconsin

$1,887

$1,506

Wyoming

$2,343

$1,720

 

Teen drivers almost always get lower insurance rates if their parents add them to their policies rather than having separate coverage. However, rates differ between insurance companies. When drivers reach the age of 19, some providers offer better standalone rates. If you have teen drivers in your household, ask your insurance agent how adding them to your policy will affect both your and their rates, and when it is better to get a separate policy.

If you avoid accidents and traffic violations between the ages of 16 and 24, you will almost certainly get a lower insurance rate when you turn 25. When you reach the age of 25, request a policy review from your insurer, according to Amy Bach, executive director of the insurance consumer group United Policyholders. “You should always inquire. “Do not wait for a discount or a rate reduction,” she advised.

How gender affects car insurance rates at 25

Insurance companies are big on data. They use analytics to calculate the cost of auto insurance based on over a dozen rating factors. Having said that, female drivers have fewer problems behind the wheel than male drivers. According to the Insurance Information Institute, women have fewer DUIs and have less serious accidents.

All of this is supported by statistics, which insurers use to determine coverage costs based on proprietary modelling. As a result of statistics showing that women are safer drivers, they will typically pay less for auto insurance.

The table below compares the average annual premium costs for male and female drivers at the age of 25.

 

Full coverage

25-year-old male

$2,181

25-year-old female

$2,036

 

Why are premiums for young drivers so expensive?

Young drivers between the ages of 16 and 25 pay more for car insurance than older drivers because they are statistically more likely to be involved in an accident. The high rate of youth driver accidents raises the risk for insurers, which they mitigate by charging higher premiums.

Male teen drivers are more than twice as likely as females to die in a traffic accident. In fact, newly licensed 16-year-olds have a 150 percent higher risk of dying in a traffic accident than teens aged 18 to 19.

Unfortunately, statistics do not improve as drivers reach their early twenties. Based on 2018 data, drivers aged 16-20 died in car accidents at a higher rate than any other age group, according to the Insurance Information Institute (the latest available).

Inexperience, alcohol use, failure to wear seatbelts, speeding, and driving during peak accident periods, particularly weekends and between 9 p.m. and 6 a.m., all play a role in the high number of teen and young adult accidents. Distracted driving, such as texting or talking on a cell phone while driving, contributes to an increase in auto fatalities among young drivers. In 2018, 2,121 people were killed in crashes involving teen drivers, according to the National Highway Traffic Safety Administration.

How much does car insurance go down at 25?

According to StrongInsurance findings on auto insurance costs at age 25, a sampling of average rates across the United States reveals significant savings when you reach the quarter century mark:

  • California: 17%
  • Florida: 15%
  • Georgia: 24%
  • Illinois: 23%
  • Michigan: 26%
  • New York: 20%
  • Texas: 23%
  • Washington: 22%

Drivers in their mid-20s are typically more experienced and mature. Many people have graduated from college and begun a career by that age. Some young adults buy a home as early as their twenties. These factors, when combined with a clean driving record, can result in a lower auto insurance rate.

To get the best car insurance rate when you turn 25, do the following:

  • Keep a clean driving record.
  • Avoid speeding and follow all traffic laws.
  • Disconnect from distractions such as cellphones and music.
  • Never operate a motor vehicle while under the influence of alcohol or drugs.
  • Defensive driving

By following these simple rules, your driving record will demonstrate that you are a responsible driver, and your insurer should reward you with a lower premium.

Consider enrolling in a usage-based insurance program, such as Progressive's Snapshot or Allstate's Drivewise, to demonstrate your driving performance. Both programs track your driving habits, such as acceleration, braking, speed, and time of day. You will also receive trip reports that will assist you in evaluating your performance. If you maintain good driving habits, you may be eligible for premium discounts through these programs.

Why you might not save on car insurance when you turn 25

If you have a teen driving record that includes multiple violations and/or at-fault accidents, your rates will not be reduced when you reach the age of 25. If you have a particularly bad driving record, your rates may even rise as early as your twenties.

Furthermore, if you obtained your license when you were older, such as in your early twenties, your rates are unlikely to decrease simply because you turn 25, as your insurer may still consider you an inexperienced driver. Purchasing a new vehicle can also have an impact on your rates because a late-model vehicle will cost more to insure than an older model.

Contact your insurance agent to find out how turning 25 will affect your premium. Underwriting policies differ from one insurer to the next. Some carriers provide lower rates to teenagers and young adults than others. If you're not happy with your current rate, shop around. Compare coverages, deductibles, and rates from various insurance companies.

Always ask about discounts. Your vehicle may be eligible for safety and security features, and you may be able to save even more if you are a student with good grades. If you rent or own a home, you may be eligible for a multi-policy discount if you combine your property and auto insurance policies.

Other factors that may affect your premiums

While your age does play a significant role in the cost of your auto insurance premium, other factors such as:

  • Where you reside
  • The make and model of your vehicle
  • How frequently you drive
  • Your credit score
  • Your gender
  • Your marital status
  • Your driving record

Regardless of your age, each of these factors has the potential to raise or lower your premiums. A new sports car, for example, will cost more to insure than a five-year-old Honda Civic. If you live in an area prone to car theft and vandalism, your insurance rates will be higher than those of drivers who live in safer areas.

Most state insurance laws allow auto insurers to use your credit history as a factor in determining your premium. You can expect to pay a higher insurance rate if you have bad credit. You pay more for auto insurance if you live behind the wheel and drive frequently than your friend who only drives a few miles per day.

Insurers prefer policyholders who do not pose a high risk. Aside from your age, driving record, and credit rating, life events that indicate maturity, such as marriage and home ownership, can result in a lower auto insurance rate.

So, does your insurance go down when you reach the age of 25? It is conditional. Driving safely, avoiding accidents, maintaining a good credit score, and foregoing a flashy sports car should result in a lower insurance rate at the age of 25.

Frequently asked questions

Will my car insurance premium go up after one accident?

Although most car accidents result in higher insurance premiums for all parties involved, this is not always the case. Some insurance policies include "accident forgiveness," which allows the policyholder to keep the same premium even if they are involved in an accident. Liberty Mutual, for example, offers this coverage to some drivers who have been accident-free for five years.

What is the best car insurance provider?

The best car insurance provider is determined by the individual's needs. To find the best policy for your needs, shop around and compare quotes from a few different insurers. Make sure to carefully examine the amount of coverage each quote represents.

When does your car insurance go down?

Many insurers reduce premium costs for people over the age of 25. However, there is no set timetable for when the cost of your policy will be reduced. If you keep a clean driving record, you should be able to find a good auto insurance rate.

How can I lower my car insurance premium before age 25?

Auto insurance is expensive; drivers under the age of 25 are well aware of this. However, many insurers provide discounts to reduce the cost of auto insurance premiums. Check with your insurance company to see what you are eligible for. Nationwide, for example, provides a "good student discount" to drivers aged 16 to 24 who are full-time students and have a "B" average or higher in school.

Methodology

StrongInsurance analyses rates for all ZIP codes and carriers in all 50 states and Washington, D.C. using Quadrant Information Services. Rates are based on male and female drivers aged 25 with a clean driving record, good credit, and the following full coverage limits:

  • Liability for bodily injury of $100,000 per person
  • Liability for bodily injury of $300,000 per accident
  • Property damage liability per accident is $50,000.
  • Uninsured motorist bodily injury per person: $100,000
  • Uninsured motorist bodily injury per accident: $300,000
  • The collision deductible is $500.
  • The comprehensive deductible is $500.

StrongInsurance used minimum coverage limits that meet each state's requirements to determine minimum coverage limits. Our sample drivers drive a 2018 Honda Accord five days a week and travel 12,000 miles per year.

These are sample rates and should only be used for comparison. Your quotations may differ.