When you first get your license as a teen, there’s a good chance you’re not paying for car insurance yourself, which is lucky, because those first few years of being insured are some of the most expensive of your entire life.
But good things come to those who wait, and that’s also true for the cost of car insurance, which goes down when you get older. But exactly how long do you have to wait before your auto insurance rates start to go down?
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Read on to find out:
When you apply for a car insurance policy, the insurance company wants to know several things about you, including:
Your driving record
Your marital status
Your education level
Your credit history
The reason you need to provide so much information when applying for a new car insurance policy is because the cost of your car insurance premiums depends on you and people like you. That’s right, good old demographic and statistical data helps determine how much you pay for car insurance. And while your credit history, marital status, and education level can help insurers gauge your level of risk, age is one of the biggest factors.
Consider this: Teenagers cause more accidents than older drivers. Men cause more accidents than women. Young men – we think you can see where this is going – cause more accidents than other demographic group. So teen boys, you’re gonna be paying more for car insurance because of your peers. Is it fair? Unclear — but that’s how car insurance works!
But you also play a role in this. How you drive is a big factor in determining your car insurance rates, which is why your driving record gets pulled and considered by your car insurance company. If you have a lot of traffic violations and accidents, you can expect to pay higher rates for your car insurance policy. Your experience behind the wheel is also a factor — if you just got your license, regardless of age, you’ll be charged a higher premium for being an inexperienced driver.
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The general rule of thumb is that your car insurance premiums will start to decrease when you turn 25. Although that’s typically true, 25 isn’t a magic number. Your insurer won’t just flip a switch and give you a break solely because you’re a quarter-century old.
But assuming you’re a good driver, you’ll probably start seeing decreases in your auto insurance every time you renew your policy even before you turn 25. But you might see a greater decrease once you hit 25, because that’s when insurers see a big drop in the number of claims submitted per age group..
Also, experience can matter more than actual age. Remember, your rates are set by a mix of aggregate data from people like you and your own personal driving history. If you get your license when you’re 26, you’ll be paying higher rates than a 26-year-old who’s been driving for a decade already because you’re still relatively green and more likely to get into accidents.
Similarly, if you’ve had your license for a while but your driving skills aren’t particularly up to snuff — maybe you’ve had an accident or two — turning 25 won’t mean much because you haven’t proven yourself to have earned a discount.
Generally, you can expect your car insurance rates to continue decreasing for most of your life until they start ticking up again after age 65. But since age isn’t the only factor that goes into car insurance rates, this isn’t a hard rule. For example, getting a nicer car or moving to a neighborhood or city with higher crime rates can influence your rates and have you paying more even in the prime of your life.
According to the Insurance Institute for Highway Safety, 60 to 64 year olds have the lowest rate of claims – they’re relatively really good drivers with a low accident rate – so their insurance premiums are low. But claims rates start going up again for 65 year olds, and fatal car crash rates increase at 70, so those drivers will have higher premiums.
You’ll probably see a decrease in your car insurance rates when you turn 25, but if 25 is a long way off or if you’ve passed your quarter-century already, there are plenty of other ways to save on car insurance than waiting for the passage of time.
Ask your insurance company about:
Good student discounts
Good driver discounts
Vehicle safety discounts
Bundling and policy renewal discounts
And one of the quickest ways to save can be to shop for new car insurance quotes from different companies. Rates can vary widely between insurers, so if you haven’t checked out the competition lately, it’s worth getting new quotes to make sure you’re getting the best deal.
Logan Sachon is the co-founder of The Billfold, a groundbreaking personal finance site for millennials that was named one of Time's 25 Best Blogs of 2012. Her work has been published in New York Magazine, Glamour, The Guardian, BuzzFeed and more.
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