If you pass your test in your late teens and then want to buy a car, you may find that the insurance would be prohibitively expensive. So, when can you expect the price to fall? Between the ages of 17 and 25, your car insurance will be at its most expensive, but there are actions you can take to reduce the cost. Once you are 25, you may well find that the price of your car insurance will start to drop. All else being equal, it should fall gradually between the ages of 25 and your 50s, with those aged between 50 and 60 generally benefiting from the cheapest rates. Over 60s tend to find that their car insurance price rises a little. Not by a huge margin, but to a premium that costs around what those in their 40s pay. The price of car insurance is calculated according to risk. Statistics show that younger drivers have more accidents, therefore they are higher risk and their premiums reflect this. The fact that younger drivers have had little or no chance to build up a no claims bonus is important too. A newly qualified 17-year-old driver will not have any no claims bonus, so they will not get any discount. Insurance companies do not yet know how much of a risk they are, so they have to ensure they cover their projected costs. There are a number of things you can do to ensure you pay as little as possible for your car insurance, whatever your age: Buying a car in a lower insurance group is one of the best things you can do to lower the cost of your premiums. All cars are placed into one of 50 groups, with 1 being the lowest priced and 50 the highest. Insuring a car in a low group will cost significantly less, as the car is seen as less risky. This is an important factor to bear in mind when shopping for a car. Insurers now offer special rates to those who use black box or telematics technology. This can either be installed in the car, or used as a smartphone app. It records your driving habits, which will be fed back to the insurance company. As long as you are a careful driver, this should lower your premium and help you to get cheaper insurance in the future. It can work against you, however, if you drive carelessly or too fast. If someone such as a parent is likely to use your car, then your car insurance can actually cost less if you add them to your policy as a named driver. If you are the one who uses the car most, then you must ensure you are the policyholder, however. Adding a driver to your insurance just to obtain a cheaper price is known as ‘fronting’ and is fraudulent. Some financial experts advise people never to accept their renewal quote. Insurance companies rely on the fact that people may be too busy or tired to shop around, so the renewal price may not be very competitive. Using price comparison sites can speed things up, but remember they do not cover all insurers. If you can, pay annually for your car insurance as it’s cheaper. Insurers charge extra for the privilege of paying monthly, so you will shell out more over the year.Car insurance by age
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Younger drivers, especially teens, have some of the most expensive car insurance rates. Drivers see their car insurance premiums start to go down around age 20, with a big drop coming around age 25. Rates tend to level out for decades beginning around age 35. Once you're past 65 years old, however, age tends to affect driving capability. That can lead to higher auto insurance risk, in turn leading to increases in annual premiums again. This article will cover:
When do car insurance premiums go down?
From ages 16 to 25, your car insurance rates will steadily go down for every year that you keep your driving record clean. Car insurance rates go down at age 25 by a large margin. Rates then decrease slowly but surely until age 65, before increase again. Keep in mind that these average rates can be affected by other factors such as your driving and insurance claim histories.
Age: 16 to 20 years old
Average monthly rate: $396
Young drivers face the highest insurance rates of any age group.
Age: 25 years old
Average monthly rate: $194
When a driver turns 25 years old, their rates drop considerably.
Age: 30 to 65 years old
Average monthly rate: $154
After the big drop at age 25, rates remain steady for decades.
We found that a 20-year-old driver pays $321 per month for car insurance. At age 25, car insurnace rates go down by about 40% to just $194 per month. Between ages 35 and 65, rates fluctuate slightly but overall stay flat. Once a driver hits 70 years old, their auto insurance rates may start going up again.
As long as you keep your driving and insurance claim histories clean, you should expect to have very few changes in your auto insurance premiums for decades after turning 30. If you do find that your car insurance provider is hiking up your rates despite your excellent driving record, it's a good time to compare quotes from other auto insurance companies.
How do your rates compare to other drivers your age?
Why young drivers pay so much for insurance
Young drivers under 25 years old are usually seen as high-risk by auto insurance providers.
The primary reason for this is their lack of experience behind the wheel. This leads to a greater chance of a car accident. The cost of teen driver insurance is especially expensive. According to the National Household Travel Survey, the crash rate per mile was 1.5 times higher for 16-year-old drivers than it was for 18- to 19-year-old drivers. Across the spectrum of high-school-age drivers, 32.8% of them have texted or emailed while driving.
Why insurance rates increase for seniors
Once a driver hits 65 years old, they usually see higher rates than other age groups. Over the years, eyesight, reflexes and cognitive ability can decline. Car insurers notice this. As such, senior drivers can expect an increase in rates as they get older. According to AAA, the chance of a fatal crash increases at age 75 and spikes considerably at age 80. At this time, you can expect a sharp increase in your auto insurance rates.
How do I lower my auto insurance rates?
Depending on how old a driver is, there are various options for possibly lowering your auto insurance rates. Auto insurance companies offer many types of discounts that can shave a considerable amount of money off of your annual premium:
- If you're under 25 years old, you'll want to take advantage of all the discounts you can find to get that high premium down. A common discount available to young drivers is the good student discount. If you maintain a GPA of 3.0 or more, you can see a discount on your annual auto insurance premium anywhere from 7% to 25%.
- If you're a parent of a teen driver, many providers allow you to add a child to your auto insurance. On the downside, adding a child to your own auto insurance policy will cost you an average of $278 a month extra. However, this is still less than you would pay for a standalone car insurance policy for a younger driver.
- If you're married, ask your car insurance provider about a discount. Auto insurers usually find married couples to be safer drivers and reward that lower risk with a discount. Also, having multiple drivers or multiple cars on your policy may reduce overall costs.
- To offset costs for senior drivers, many auto insurance companies offer a senior discount. Also, AARP offers safe driving classes. If you take the class and pass, car insurance providers may offer you a safe driving discount.
- If you're driving less and can afford it, look into increasing your deductible. The higher your deductible, the lower your auto insurance premium usually is. This would mean paying more in deductibles if you do have an accident. However, reduced driving on your part means less of a chance of having an accident, and therefore paying a deductible.
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Car insurance does go down at 25. The average price of car insurance for a 25-year-old is $3,207 for an annual policy. By contrast, drivers pay an average of $7,179 at 18 and $4,453 at 21 — which demonstrates that car insurance does go down as you age.
However, this milestone isn't as magical as you might think. Yes, car insurance for drivers under 25 is more expensive. But the difference between how much 24-year-olds and 25-year-olds pay on average for car insurance is relatively small — only 11%. Our analysis found that rates go down much more at other one-year intervals.
Read on to learn more details about when car insurance does go down.
When does car insurance get cheaper for young drivers?
Provided they maintain a clean record, young drivers will likely see their car insurance go down after every year driving on the road — but how much it actually decreases by varies from year to year. Auto insurance for 25-year-olds costs $3,207 on average for an annual policy, or $267 per month. That's only 11% cheaper than the $3,597 ($300 per month) that 24-year-olds pay on average.
| 18 | $7,179 | |
| 19 | $6,021 | 16% |
| 20 | $5,333 | 11% |
| 21 | $4,453 | 17% |
| 22 | $4,128 | 7% |
| 23 | $3,840 | 7% |
| 24 | $3,597 | 6% |
| 25 | $3,207 | 11% |
While your auto insurance premiums may drop at 25, our research found that they will go down the most when you turn 19 (by 16%) and when you turn 21 (by 17%).
The reason why insurance is higher for a person under 25 is because younger drivers are statistically more likely to get into an accident than older drivers — so they're riskier for companies to insure. As young drivers get older, the risk they pose to insurers decreases, and insurers reflect this decrease in lowered premiums.
What age does car insurance go down for male vs female drivers?
Your car insurance does go down after you turn 25, but not as much as it does on other birthdays. However, unless you live in a state where insurers can't factor gender into insurance rates, one significant change does occur at age 25: the difference between what male and female drivers pay for car insurance. Car insurance goes down for males by 12% at age 25, whereas it goes down for females by 9%.
| 18 | $7,561 | $6,797 | 11% |
| 20 | $5,590 | $5,076 | 10% |
| 23 | $3,965 | $3,716 | 6.7% |
| 24 | $3,702 | $3,493 | 6% |
| 25 | $3,247 | $3,167 | 2.5% |
Car insurance for a 25-year-old male costs 2.5% more than car insurance for a 25-year-old female, on average. Compared to the difference between what 18-year-old males and females pay (11%) or even what 23-year-old males and females pay (6.7%), that's a much smaller gap.
Statistics reveal why car insurance is so expensive for young male drivers. Research from the American Automobile Association (AAA)'s Foundation for Traffic Safety shows that men spend more time behind the wheel than women do. And according to the National Highway Traffic Safety Administration, the distribution of fatal crashes among drivers ages 21 to 25 differs dramatically by gender: 76% male versus 24% female. Insurers charge male drivers more to account for this difference in risk.
In certain states, however, it is illegal for insurers to include gender in their rate calculations. These states include:
- California
- Hawaii
- Massachusetts
- Michigan (in certain areas)
- Montana
- North Carolina
- Pennsylvania
No matter what state you live in, however, car insurance rates for male drivers go down so much that at age 32, men pay slightly less for car insurance on average than women do.
Does car insurance from major national insurers go down at 25?
We analyzed quotes from four of the largest auto insurance companies — Geico, State Farm, USAA and Progressive — and found that while car insurance does go down at 25 with each of them, the amount it decreases by varies significantly. Drivers looking for cheap car insurance should consider USAA and Geico over Progressive and State Farm, as these two companies offer cheaper rates to young drivers.
However, if you hold a policy with USAA or Geico, your car insurance will decrease only slightly when you turn 25. There is only a 4% difference between USAA's average annual rate for 24-year-olds versus 25-year-olds, and only a 7% difference between Geico's average annual rates.
Conversely, if you hold a policy from Progressive or State Farm, your insurance will go down far more when you turn 25. Average car insurance rates from State Farm go down by about 13% between the ages of 24 and 25, and at Progressive, they go down by about 11%.
Why isn't my car insurance going down at 25 years old?
Rates don't necessarily drop as soon as you turn 25. Other factors can impact 25-year-old car insurance rates more significantly than gender. Here are some of the reasons why your rates may not have gone done once you reached age 25:
- Experience: If you're a new driver at 25 years old (or over) and it's your first time buying car insurance, then you'll pay far more than a driver who was licensed at 16.
- Driving history: If you've been in an accident or received a speeding ticket, insurers will consider you a more high-risk driver and charge you accordingly.
- Credit history: Unless you live in one of the few states that have made it illegal to factor credit into rates, a lower credit score may increase your car insurance premiums.
- ZIP code: If you move to a neighborhood with higher rates of theft and vandalism, then insurers will charge you higher premiums to account for the increased risk of damage or theft.
Be sure to shop for cheap car insurance quotes before purchasing a policy. Every insurance company calculates rates differently, and some insurance companies will emphasize different factors more heavily than others. We recommend reassessing your insurer every year to get the best rate.
How to get cheaper car insurance as a 25-year-old driver
If you're a young driver in your 20s, you've likely wondered how to decrease your auto insurance costs. The good news is, drivers of this age can take advantage of several strategies and discounts to make their car insurance rates go down.
Strategies for how to make your car insurance go down
By the time you hit age 25, you've likely passed the point where you can stay on your parents' insurance. (If you have not, however, you should certainly do so, since this is one of the best ways for young drivers to save on their premiums.) Fortunately, there are other ways for 25-year-olds to get their insurance rates to go down.
- Don't purchase unnecessary coverage. Bought a shiny new sports car? You will likely pay more to insure it, as you'll want collision and comprehensive coverage commensurate with the car's value. As your car's value depreciates over time, however, consider reducing or eliminating collision and comprehensive coverage. If your car is only worth a few thousand dollars, it doesn't make sense to shell out for high premiums to cover an asset of limited value.
- Team up with your spouse. If you're married and each of you drives separate cars, you may be able to reduce your auto insurance payment by up to 32% through sharing a policy with your spouse, as insurers consider married couples more financially stable and risk-averse.
- Shop around for the best deal. Our research found that rates for 25-year-old drivers vary dramatically. Erie charges these drivers $1,518 for an annual policy, while Allstate charges $5,074 — more than three times as much. Make sure you periodically shop around for the best deal.
It's easy to get frustrated by the high quotes you'll receive from insurers, particularly if you've been expecting your premiums to go down once you hit 25. But by thinking strategically and getting multiple quotes from different insurers, you can lower your rate by hundreds or even thousands of dollars.
Find Cheap Auto Insurance Quotes for 25-Year-Olds
Discounts for 25-year-old drivers
As you shop around for the best rate, make sure you're also asking insurance companies about all applicable discounts. Twenty-five-year-old drivers might not be able to take advantage of student-away-from-home or good-student policies, but there are plenty of other ways these young drivers can save on car insurance:
- Professional and academic organizations: You might not be able to qualify for a good-student discount anymore, but your university may have partnered with an insurance company to secure discounts for alumni. Trade associations and professional organizations often do the same, so be sure to check which discounts you can get based on your job or degree.
- Accident-free: Been accident-free for three to five years? You may qualify for an accident-free or good-driver discount. While most insurers apply this discount automatically, be sure to ask so you know you are getting the maximum benefit.
- Telematics: Know that you're a safe driver, yet still paying high rates? Consider signing up for a telematics program such as Progressive Snapshot or Liberty Mutual RightTrack. These programs use a telematics-tracking device to monitor your driving performance and reward you with discounts.
- Defensive driving: By taking a defensive-driving class, you'll not only learn how to drive more safely, but you can reduce your auto insurance premium anywhere from 5% to 20%. Be advised, however, that some states and some insurers only extend this discount to seniors or drivers under 25. Check with your insurance company to see if you qualify before you sign up for a class.
- Low mileage and usage: If you drive infrequently — fewer than 7,500 miles a year — you may be able to score significant savings on your auto insurance premiums. You might also consider switching to pay-per-mile car insurance if you are confident your mileage will stay low.
- Bundling: If you bundle your renters insurance with your auto insurance or bundle auto and homeowners insurance, your insurer will likely reward you with a discount, often ranging from 5% to 25%.
- Paid-in-full: If you can pay the entire cost of your six-month or annual policy upfront, many insurers will give you a discount of 5% to 10%.
- E-bill or auto payment: Don't want to deal with the hassle of paper bills? Neither do insurers, and some will give you a discount of 5% to 10% for using an e-bill or an electronic fund transfer.
- Safety features: Does your car have certain safety features, such as anti-lock brakes or daytime running lights? You could receive an auto discount because of it.
Ask about these discounts when you call insurance companies for a quote. You may be surprised at the savings you're able to generate simply by asking questions.