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Does car insurance go down at 25?

Want cheap auto insurance? It might pay off to wait until your 25th birthday.

If you’re about to hit the quarter-century mark, how does lower car insurance sound for an early birthday gift? 25 is the age where newer drivers often start paying less on their policies — but it doesn’t just happen all of a sudden and it might not happen at all. It all depends on other factors about you and your driving record. So if you’re nearing the midpoint of your 20s, keep reading to see how your rates might be affected by your upcoming birthday.

When does car insurance go down?

“In general, the cost of insurance drops starting at age 17 through age 25,” Geoff Williams, vice president of auto insurance for AllState, says. “Maturity and driving experience reduce the cost of insurance, and age 25 is the inflection point. At age 25, you are considered an experienced and mature driver, and there is no longer incremental improvement.”

But there may be a more significant drop in your auto insurance rates. Insurance rates just don’t change automatically overnight as soon as you turn 25, and they don’t change only because you’ve turned 25. But, after you age out of the 16-to-24 demographic, you enter a new demographic that’s statistically speaking considered less of a risk.

“In this pool, the drivers are typically safer and more experienced than drivers just starting out at 16 years old,” Tom Wright of United Auto Insurance in Chicago says. “These years of experience help on the road and typically make safer drivers, thus reducing car insurance rates.”

What determines your car insurance premiums

“Rates are really high when we are young and most likely to be involved in accidents,” John Espenschied of the Insurance Brokers Group in St. Charles, Missouri, says.

According to the Centers for Disease Control and Prevention (CDC), 2,333 teenagers between 16 to 19 were killed in motor vehicle accidents in 2014, while 221,313 were injured. Young drivers’ reputation for speeding, lack of experience, plus activities like texting while driving and drunk driving mean an insurance company is apt to keep your rates on the higher side of things until you at least reach your mid-20s.

Beyond that, the type of car you drive always plays a role in your insurance rates, no matter how old you are. If you’re 25, have been driving the same car since high school and have few-to-no claims attached to it, your insurance rates are likely to drop. But if you landed a lucrative gig out of college and used your hard earnings to buy a newer, nicer ride, your premiums will reflect the change (and value) of the vehicle.

“If a driver at age 25 buys a sports car, they are probably not going to have a better rate than when they were previously driving a sedan,” Wright says.

Another rate influencer is your insurance score, a special metric that combines your credit score and your insurance history. The better your insurance score, the better your chances of getting lower auto insurance rates.

“A 25-year-old who has done some work to establish and improve his or her credit score — which ultimately relates to their insurance score — may reap rewards as it relates to his or her auto premiums,” Tom Bartsch of Wisconsin-based Dairyland Insurance says.

Learn more about how much car insurance costs.

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Exceptions to decreasing car insurance costs

There’s an exception for the length of time you’ve been driving for. A 25-year-old motorist who just hit the road a year ago is still considered inexperienced and will likely pay higher premiums than the 25-year-old who’s been driving for nearly a decade.

Plus, there are other factors involved, like your driving record. If you got your license at 17 and your driving history’s been spotless since then, you’ll be considered for a decrease in your mid-twenties. But if it’s been eight years of speeding tickets, moving violations, accidents and more insurance claims than you can count, your rates will be more likely to go up at age 25 than down.

“Insurance companies are not necessarily going to give drivers with a history of accidents a better rate,” Wright says.

How to ensure cheap car insurance rates

You may just be turning 25, and that can mean lower car insurance premiums. But those discounted rates could be short-lived as you get older.

“Changes in the policy, like newer vehicles, coverage changes, number of people in the house, etc. could all be factors that move the cost up,” Williams says, “so it’s easy to miss the savings you’re getting as you mature.”

So how do younger drivers keep their insurance rates low for longer? Stay mindful of the life events that can lower your car insurance.

If you are looking to save money as you near your 30s, Espenschied says getting married, buying more cars, getting a property or renters insurance and making sure you have an excellent credit history are helpful.

“Each one of those will contribute to a lower cost of insurance when young,” he says.

Turning 25 is that time when you’re still young, but now, you’ve got enough driving experience and leverage to command lower insurance rates. Maintaining a clean driving record is the best thing you can do, but shopping around for the most affordable car insurance rates with your age in mind gives you more of an advantage with insurers.

Disclaimer: Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.

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