Good things come to those who wait.
Turns out that’s also true for the cost of car insurance. But exactly how long do you have to wait before your auto insurance rates start to go down?
When you first get your license as a teen, there’s a good chance you’re not paying it yourself. You’re lucky: you don’t realize just how expensive you are. But as you grow up the cost of insuring yourself and your vehicle goes down.
You’ll hit that sweet spot when you’re in your mid-20s, but there’s more to it than just waiting for a magic birthday to come around.
How auto insurance rates are set
The cost of your car insurance premiums depend on you, and people like you. Younger people (think teenagers) cause more accidents than older people. Men, in general, cause more accidents than women. Young men – I think you can see where this is going – cause more accidents than other demographic groups. Therefore, if you’re a young man, you’re going to be paying more in car insurance, if only thanks to your peers.
But you also play a role in this. How you drive is a big factor. If you’re getting into accidents or stopped by the cops every week...well, it sounds like you have bigger issues than just your car insurance rates being high, but still, they’re going to be pretty high.
"Okay, but I’m not always going to be young and stupid, and with enough practice I’ll get to be a pretty good driver and quit with the fender benders," you say.
You’re right! That’s why you’ll start seeing savings sooner than you think.
When your auto insurance rates decrease
The general rule of thumb is that your car insurance premiums will start to decrease when you turn 25. That’s typically true, but 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.
25 is usually the age when your rates go down but it has to do with all of the other factors that insurers use to set rates. For instance: teens suck at driving. It’s not their fault, really. They just don’t have a lot of experience. They speed, they don’t judge distances well, there’s the odd stigma that being a safe driver isn’t fun or cool and you should live life like it’s a Fast and Furious movie.
Those are the things that really matter – how many times you’ve submitted claims, your driving record, and so on. And those things just happen to be worse when you’re a teen. You get better as you get older. 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. Yes, you might see a greater decrease once you hit 25 because that’s when you see a big drop in the number of claims submitted per age group, but you’ll already have paid less in the years leading up than you did when you first got your license.
Also, experience matters 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, turning 25 won’t mean much because you haven’t proven yourself to have earned a discount.
You should expect your rates to continue decreasing for most of your life. People become better drivers once they're married and have kids, so their rates go down. You can add that to the white picket fence dream. According to the Insurance Institute for Highway Safety, 60-64 year olds have the lowest rate of claims – they’re relatively really good drivers – 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 you have a good 40 years of decreasing insurance premiums before Father Time starts winning and your premiums go back up. But by that time, just make your ungrateful grandkids drive you around. They need the practice anyway.
Other ways to save on auto insurance
I know, I know, it’s disappointing that 25 isn’t a huge milestone that instantly saves you money. You thought you finally had another birthday to look forward to after 18 and 21. Don’t get me wrong, turning 25 is great. You should definitely make it a goal in life. Just don’t have huge, premium-saving expectations for it (like we all do on our birthdays, right?).
As a consolation prize, there are a lot of other ways to save on your auto insurance that don’t rely on that one birthday.
Did you know you can get discounts for being part of certain organizations? Or, if you don’t want to wait until your 25th birthday, check out good student discounts. Good driver discounts, vehicle safety discounts, bundling and policy renewal discounts – there are so many different kinds of discounts that you basically have to go out of your way to not save money on your auto insurance.
So don’t wait around for the savings to come to you. Take advantage of discounts that are already available. That 25th birthday deal will just be all the more rewarding.
Image: Chris Goldberg