Updated April 19, 2021|4 min read
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When you first get your license as a teen, there’s a good chance you’re not paying for auto insurance yourself, which is lucky, because those first few years of being insured are some of the most expensive of your entire life.
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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?
Car insurance companies use statistical data, among other factors, when determining your car insurance rates
Teenage and new drivers usually have higher premiums because they're more likely to get into a car accident or receive a traffic violation
Car insurance rates typically go down every year if you're a safe driver. They'll likely decrease even more once you turn 25
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 because insurance companies use demographic and statistical data to help 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.
Teenage drivers tend to cause more accidents than older, more experienced drivers, so insurance companies raise your rates due to the high risk factor. However, there are things you can do to help lower your rates. How you drive is a big factor in determining your car insurance premiums, 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. You might see an even 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 remain unaffected by age after you turn 25, until they start ticking up again after age 65. But there are lots of other factors that can affect your premiums even once you’re old enough for age not to be a factor.For example, getting a sports 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 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 typically 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
Usage based discounts, that track your driving with an app and award savings for safe driving patterns
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.
Car insurance companies use statistical data, among other factors, when determining car insurance rates. Since drivers under 25 are more likely to get into car accidents and file claims than drivers over the age of 25, younger drivers pay more. Once you turn 25, you’re no longer part of the risky age group, so if you’re a safe driver with no violations or accidents on your record, your rates will typically decrease.
If you’re in an at-fault car accident, your car insurance rates will likely go up. Depending on your insurance company, it may stay on your record and continue to affect your rates for three to five years. Car insurance companies usually only look at your recent driving history, so the accident will “fall off” your record after enough time has passed.
If you haven’t gotten into any accidents or received any tickets when you go to renew your policy, your car insurance rates may likely decrease or stay the same. Most insurers reward safe drivers with discounts on their premiums. However car insurance rates can also go up at renewal, even if you’re gone the whole policy term without any accidents or claims.
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