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Auto insurance premiums tend to cost more for drivers under the age of 25. However, age is just one of many factors insurance companies use to calculate your rate, and there's no guarantee you'll be given a lower premium for your 25th birthday. Here's what you need to know.
Does Auto Insurance Go Down at 25?
On average, the premium for a new auto insurance policy is cheaper for a 25-year-old than for a 24-year-old. Here's some data from Progressive about its average monthly insurance rates by age:
| Average Insurance Rates by Age | |
|---|---|
| Age Range | Average Monthly Rate |
| 17 and under | $247.28 |
| 18 | $271.92 |
| 19-20 | $242.40 |
| 21-22 | $215.04 |
| 23-24 | $189.78 |
| 25-29 | $168.86 |
| 30-34 | $159.72 |
| 35-39 | $156.13 |
| 40-44 | $151.81 |
| 45-49 | $151.61 |
| 50-54 | $141.85 |
| 55-64 | $128.60 |
| 65-74 | $122.26 |
| 75 and up | $127.96 |
Source: Progressive Insurance
The reason rates tend to go down at age 25 is that younger drivers are statistically more likely to cause an accident and file an insurance claim.
According to 2022 data analyzed by the Insurance Information Institute, drivers ages 16 to 20 are the most likely of any age group to die in a car crash, followed by drivers ages 21 to 24. Insurance companies mitigate this risk by charging higher premiums.
Why Your Auto Insurance May Still Be Expensive at 25
Turning 25 won't necessarily earn you an immediate discount on your monthly premiums because insurance providers consider several factors when determining your rate. Here are some potential reasons why your premiums may not have changed:
- You're in the middle of your policy: Car insurance companies typically assess policies every six or 12 months, which is when they set your rate for the upcoming policy period. If you turn 25 before that happens, you may need to wait until your policy renews or switch to a different insurer to capture the savings.
- Marital status: Married policyholders may pay anywhere from 5% to 15% less on their premiums than single people. And if you've recently gotten divorced, you can expect to pay roughly $50 more for a six-month coverage period.
- Where you live: Drivers in urban areas tend to pay more than suburban and rural drivers due to higher rates of accidents, theft and vandalism. If you've recently moved to a bigger city, that could negatively impact your rate.
- Vehicle type: Insurance companies rate different car models based on factors like their likelihood of theft, safety features and repair costs. If you've recently switched vehicles, your rate could go up or stay the same.
- Your driving record: If you've recently been in an accident or were cited for a serious traffic violation, insurers will view you as more likely to file a claim, resulting in potentially higher premiums.
- Your annual mileage: The more you drive, the more likely you are to get in an accident. If you've recently started putting in more miles, it could negatively impact your rate.
- Your credit history: Most states allow auto insurance companies to use your credit history to help determine your rates. While states typically don't allow insurers to use your credit history as the sole basis for hiking your rates, it can be used in conjunction with other risk factors.
- Coverage level: The types of coverage you choose for your policy and the amount will affect your rate. If you've recently increased your coverage or decreased your deductible, you're likely paying more, not less.
8 Ways to Lower Auto Insurance Costs
While you can't control all of the factors that go into your car insurance rate—your date of birth, for instance—there are some that you can control. Here are some ways you can potentially lower your car insurance costs:
- Shop around for a better rate. Rate shop and get quotes online from a handful of insurance companies. Remember, each one will weigh various factors differently, and some offer discounts that others don't. It won't guarantee a lower rate, but it could help.
- Adjust coverage and deductibles. Some car insurance companies offer optional coverage that's nice to have, but it may not be worth the cost. Look for extra coverage that you don't truly need and could stand to cut. Also, if you have an emergency fund you can use to cover the extra out-of-pocket costs, consider increasing the deductible on your collision and comprehensive coverage policies.
- Bundle your auto insurance. Most insurers offer discounts to customers who purchase multiple policies. You may be able to save on your car insurance by bundling it with renters insurance, homeowners insurance, life insurance, motorcycle insurance or other policy types.
- Take a defensive driving course. Some insurance companies offer a discount if you attend a defensive driving course, either online or in person. Check with your insurer to see if it offers this option.
- Look for other discounts. Depending on the insurer, you may qualify for other discounts based on the organizations you belong to, your driving habits, homeownership status and more.
- Improve your credit score. Insurance companies don't use your FICO® Score☉ like lenders do, but they may calculate a credit-based insurance score based on your credit profile. Check your credit score and credit report to get an idea of your overall credit health. If you find areas that you can address, take action to improve your credit, which can help lower your car insurance rate.
- Consider a safer car. If you drive a model with below-average safety ratings, you could be paying more to cover it. If possible, think about trading in your car for a model that will not only save you on premiums but also better protect you and your loved ones.
- Opt for usage-based insurance. Check to see if your insurance provider offers a usage-based insurance program. Depending on the insurer, your rate may be calculated based on how many miles you drive or on your driving habits. In both cases, the company uses telematics to gather data directly from your vehicle to help determine your rate. Just keep in mind that unsafe driving could result in a higher premium.
Maintain Good Credit to Keep Premiums Low
Since your credit can be a factor in your insurance premiums, improving your credit may help you save.
Experian's free credit monitoring can help by giving you free access to your Experian credit report and FICO® Score powered by Experian data. You'll also get real-time alerts when changes are made to your credit report, such as new accounts and inquiries. Monitoring your credit closely will give you the information you need to build and maintain a good credit score.