Car insurance premiums are determined by a variety of factors. But two crucial ones are your age and driving experience.
The fact is, insurance companies consider you a young and inexperienced driver until you’re 25 years old. This means that you can expect to pay high premiums until then.
If you have any other characteristics that also push up your premiums, such as a job that causes you to drive a lot, they can quickly become unaffordable.
But is there nothing you can do to find cheap car insurance if you’re a driver under 25?
There are some insurance companies that specialize in affordable auto insurance for under 25s. We have put together a list of some of those insurers to consider, as well as some top tips for reducing your car insurance premiums as a young driver.
- Esurance – Best Overall
- State Farm – Best For Students
- Geico – Best For Online Access
- Liberty Mutual – Best For Accident Forgiveness
- USAA – Best For Military Families
Best Car Insurance Companies For New Drivers Under 25
|Product Name||Features||Best For…||Link To Product|
|Esurance|| ||Best overall||Visit Site|
|State Farm|| ||Best for students||Visit Site|
|Geico|| ||Best for online access||Visit Site|
|Liberty Mutual|| ||Best for accident forgiveness||Visit Site|
|USAA|| ||Best for military families||Visit Site|
Best Car Insurance Companies For First-Time Drivers Under 25
Fortunately, there are some car insurance providers that have specific policies aimed at making car insurance affordable for under drivers 25.
You can still expect to pay more than your parents, but the rates that you get with these companies are much more affordable than you will see elsewhere.
Esurance – Best Overall
Esurance is a reliable insurance company owned and operated by insurance giant Allstate. There are plenty of ways to get discounts on Esurance. If you get a quote online, you’ll earn a discount, and if you get a multi-policy, by linking up with your parents, for example, you get a further discount. Also, if your parents move from another insurance provider, that will earn you yet another discount.
Esurance also offers discounts to alumni of Pac-12 school, as well as discounts for good driving and good grades.
State Farm – Best For Students
While you may pay more with State Farm when you first sign up, they offer lots of ways for you to lower your premiums. State Farm has rewards good grades and good driving habits with discounts. If you go three years without moving violations or at-fault accidents, your premiums can drop dramatically.
State Farm also offers a defensive driving course called Steer Clear, and participating in the course can lower your premiums. Cutting your mileage may also cut your costs.
Geico – Best For Online Access
Geico not only has an easy to use online system but also offers discounts for drivers under 25. You can lower your premiums if you take driver’s education and defensive driving courses, and teen drivers and college students can receive discounts for good grades.
Liberty Mutual – Best For Accident Forgiveness
Liberty Mutual not only offers affordable rates for young drivers, but they also give these drivers accident forgiveness, which means your rates won’t suddenly increase if you do have an accident and need to make a claim.
USAA – Best For Military Families
If you are a member of the military or one of your parents is, you can qualify for insurance from USAA. They offer discounts to make car insurance affordable to young drivers. Maintaining a good driving record can earn discounts, as can taking an approved defensive driving course.
Good students receive discounts if they maintain a good GPA, and you can also receive a discount if another family member is already insured with USAA.
You can see more top car insurance companies here: “10 Best Car Insurance Companies.”
Why Do Young Drivers Have High Insurance Premiums?
While all car insurance factors use basically the same factors to determine car insurance premium, they are weighted differently, which is why you find different offers from each one.
One of the most important factors that they consider is demographics. This includes your age and gender, but also statistics about who gets into accidents more frequently.
Unfortunately for young drivers, statistics indicate that drivers under the age of 25, especially male drivers under the age of 25, have more accidents. So this is a major factor in increasing insurance premiums for young drivers.
Other factors that also include your premiums are:
- Where you live – Busier areas tend to have more traffic and therefore more accidents. Some areas are also more prone to theft and vandalism.
- The type of car you have – Expensive cars and powerful cars are more expensive to insure, while large cars with a lot of safety features, like airbags and automatic seatbelts, are cheaper to insure.
- Marital status – Statistics indicate that married drivers have fewer accidents.
- How much you drive – The more time you spend on the road, the more likely you are to have an accident, So if you drive for work, you will pay more than someone who just drives on the weekends.
- Your credit rating – If your credit rating is poor, this will increase your premiums. Make sure to pay off debts to improve your credit score. f you don’t have a credit history, you can create one by taking out a credit card and keeping up with payments.
- Previous claims – If you have made any claims in the short time that you have been driving, this will also increase your premiums significantly.
If your premiums are already high because you are a young driver and you have another factor that drives up rates, such as an expensive car or a job that requires a lot of driving, your premiums can be very costly.
How Much Does It Cost?
To give an indication of cost, the recent average cost of annual auto insurance premium for young drivers is:
- 16 – $6,777
- 17 – $6,225
- 18 – $5,473
- 19 – $4,163
- 20 – $3,816
- 21 – $3,057
- 25 – $2,184
In comparison to the cost for older drivers, the premiums for drivers between the ages of 26-65 is around the $1,700-$1,900.
To learn more about how costs are determined, read “Top Reasons Why Car Insurance Rates Are Periodically Modified.”
Other Things You Can Do To Lower Your Car Insurance Premiums
Besides shopping around for the best deals, there are some things that you can do to lower your insurance premiums.
1. Earn discounts for good driving
Many car insurance companies will offer you a discount if you can prove that you are a good driver. This can take a few different forms. The most common way to do this is to take a defensive driving course approved by the car insurance agency.
Many car insurance companies will also offer you a discount if you don’t make a claim for a certain period of time, often three to five years, which will only lower your premiums in the long term.
Some insurance companies are starting to offer “black box” insurance plans. This basically involves installing a dashcam that monitors your driving. If you drive well, you can start to see discounts.
Many insurance companies offer discounts when you insure more than one car with them. For younger drivers still living with their parents, taking out a multi-car plan together can significantly lower premiums.
Some insurance companies also offer discounts if you switch to them. So if your parents switch companies to go in on a multi-car policy with you, this could earn you all an additional discount.
3. Look at insurance before you buy your car
For young drivers, it can be a mistake to find your car, and then look into insurance. The type of car that you have can make a significant difference to your insurance premiums. So check the likely premium rates before you buy your car.
When you are a young driver, the best option is often a sensible car with lots of safety features, which will result in insurance discounts. You may need to wait for your 25th birthday to buy your classic V8.
4. Ask for higher deductibles
The deductible is the amount that you have to pay before your car insurance kicks in. In general, the higher your deductible, the lower your premiums will be. If you can afford to pay a higher deductible, this is a reasonable strategy. However, there is no point agreeing to a $5,000 deductible if there is no way you will be able to pay it in the event of an accident.
5. Improve your credit score
If you are a young driver and you don’t have much of a credit score, it may drive up your premiums. It is not only bad credit, like having debts or not paying bills on time, that can lower your credit score. If you don’t have a credit record, your score will also be low.
You can start to build a credit score for yourself by taking out a credit card and using it sensibly, or even by taking out a small loan. There are small loans that you can pay off quickly with little to no interest.
Statistics and the methods used to calculate insurance premiums work against young drivers and can leave you with unaffordable car insurance premiums. But there are things that you can do to lower your premiums.
Shop around for the best deals and look at car insurance companies that offer special discounts for young drivers. You can also look for ways to drive down your rate, like taking a defensive driving course or choosing to purchase a car with a high safety rating.
If you are smart about your approach, it is possible to find affordable car insurance, even if you are under 25.