Car insurance rates are high for teens and young drivers and then usually drop by age 25
That’s because younger drivers are seen as riskier to insure, and more likely to have accidents
But your car insurance rates aren’t guaranteed to drop when you turn 25, your driving history and level of experience also matter
But your rates don’t just drop all of a sudden, and, depending on how long you’ve been driving and the state of your driving record, you may not see a rate decrease at all. If you’re nearing 25 and hoping to save money on your car insurance premium, keep reading to see how your rates might be affected by your upcoming birthday.
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Teens and young adults are notoriously expensive to insure because insurance companies see them as riskier drivers who are more likely to cause an accident and file a claim. Typically, the younger the driver, the more expensive they’ll be to insure, and then rates will slowly drop over time until the driver reaches 25. After that, age will no longer affect premiums — at least until you turn 65 and rates start climbing again.
“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.”
If you’re a teen or young adult driver, your rates may drop every year until you turn 25, assuming you drive safely and don’t have any accidents or violations. But after that, your rates won’t have a reason to decrease, and your premium will be determined by all the same factors that go into calculating rates for other drivers.
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 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-earned cash 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.
And the make and model of car you drive aren’t the only things that affect your car insurance premiums: Your driving record, credit score, ZIP code and coverage amounts will also determine how much you’ll pay for car insurance.
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While young drivers do tend to pay more for car insurance, that isn’t the only factor that goes into your premiums, as we explained above.
That makes it hard to predict how much your car insurance will decrease as you approach the age of 25. And some drivers won’t see any decrease at all, if they fall into the following categories:
Inexperienced drivers. If you’re an older driver who’s just learning to drive, your inexperience will likely lead to high premiums despite your age. A 25-year-old driver who just got their license a year ago is still considered inexperienced and will likely pay higher premiums than a 25-year-old who got their permit at 15 and has been driving for nearly a decade.
Drivers with accidents and violations on their 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 you have speeding tickets, moving violations, accidents or insurance claims, your rates will be more likely to go up at age 25 than down.
Turning 25 can lower your 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 should drivers keep their insurance rates low for longer? There are a few ways to lower your car insurance premiums over time, including:
Making sure you’re getting every available car insurance discount
Bundling auto insurance with another product, like home, condo or renters insurance
Setting appropriate coverage limits and deductibles, so you’re protected but not overpaying (an independent broker can help with this)
Choosing safe vehicles that won’t be extra expensive to insure
Regularly shopping around for new car insurance to make sure you’re getting the best rates possible
Turning 25 means you’re still young, but now you’ve got enough driving experience to get lower insurance rates. Maintaining a clean driving record is the best thing you can do to keep those rates low, but shopping around for the most affordable car insurance rates with your age in mind gives you more of an advantage with insurers.