Yes, car insurance premiums often decrease around age 25. This is because drivers under 25, especially teens, are considered higher risk and tend to pay more for car insurance. By 25, drivers have more experience, and insurance companies view them as lower risk.
However, turning 25 alone does not guarantee a decrease. Some other factors insurance companies consider are your driving record, type of car, location, and gender. Rates can fluctuate based on these.
Statistics show that average car insurance rates begin to drop around age 25, with an even larger drop by age 30. One study found average rates decreased by about 15% from age 25 to 30.
Factors That Affect Car Insurance Rates
1. Age
Car insurance companies often use age to set rates. NerdWallet reports the average annual premium for full coverage is $1,621 for a 35-year-old driver and $3,127 for a 20-year-old. That’s a $1,506 difference per year. Younger drivers tend to cause or be in more accidents than older drivers, per Insurance Institute for Highway Safety statistics. In 2019, drivers 16 to 24 were 9% of the population but 15% of all crash deaths.
2. Driving Record
Your driving record also impacts your car insurance rate. It shows your safety as a driver based on violations, accidents, claims, and tickets. More incidents mean a higher risk of future accidents. So companies charge more for coverage if you have a poor record. But a clean record with no violations or accidents can mean lower rates and discounts.
3. Location
Where you live and drive affects your car insurance rate too. Different states have varying laws on coverage needs, liability limits, and no-fault rules. These laws impact rates across states. For example, Michigan has the highest average premium at $3,096 per NerdWallet. This is partly because Michigan requires personal injury protection coverage. This pays medical and lost wage costs after an accident regardless of fault.
Beyond state laws, your location can also change rates based on crime, traffic, weather, and road quality. These factors influence risks like theft, collisions, and car damage. For instance, urban areas with high crime and heavy traffic often have higher rates than rural areas with low crime and light traffic.
4. Vehicle Type
The vehicle you drive impacts your rate too. Companies consider the make, model, year, engine size, safety features, and value. These factors influence risks of theft, damage, accidents, and repair/replacement costs. For instance, new, expensive, or high-performance vehicles may have higher rates than old, cheap, or low-performance ones.
How Do Car Insurance Rates Change at Age 25?
Gradual Decrease in Rates
Rates typically decrease from ages 18 to 60. For example, 30-year-olds pay 64% less than 18-year-olds on average. At 60, you pay about 13% less than at 30. But rates start rising again in your 70s and keep climbing into your 80s.
One big drop occurs at 25. Companies see these drivers as more mature and responsible than younger ones. They also assume more experience and fewer accidents. So rates are lower for those 25 or older.
As Per NerdWallet, the average premium for full coverage drops $460 (15%) from age 20 to 25. For minimum coverage, it drops $256 (23%).
Impact of Driving Experience
Age affects rates, but it’s not the only one. Also important is driving experience. How long you’ve driven and your yearly miles. Accident risk decreases with experience. Companies charge less for the experience.
Age doesn’t necessarily equal experience. Others drive less or later. Thus, corporations may base prices on experience rather than age.
For instance, a 25-year-old who began driving at 23 may receive a different rate than one who started at 16. One traveling 5,000 miles a year may pay different rates than one driving 15,000 miles. Rates may be greater or lower than normal for that age group based on experience.
Comparison of Rates with Other Age Groups
Typically, car insurance rates lessen when a driver reaches 25. Yet, this doesn’t guarantee them to be the least costly across all age groups. The comparison of your rate with drivers from varying age brackets could still hinge on elements such as your gender, driving record, geographic position, and vehicle kind.
NerdWallet reports the usual full coverage premium for a 25-year-old at $1,917. This falls below $3,127 for a 20-year-old but rises above $1,627 for a 35-year-old. Regarding minimum coverage, a 25-year-old on average faces $832, which comes in under $1,088 for a 20-year-old but exceeds $560 for a 35-year-old.
Therefore, while rates diminish at 25, they may not hold the title for the most economical overall. Depending on your individual circumstances, your expense could still rise above or dip below those of drivers from other ages.
Tips to Save on Car Insurance at the Age of 25
There are still methods to save on vehicle insurance after 25. Here are some ways to decrease your 25-year-old auto insurance:
1. Maintain a Clean Driving Record
Keep a clean driving record to economize on vehicle insurance. Avoid driving infractions, accidents, claims, and citations that might lead to future accidents. You may get reduced auto insurance rates and discounts by driving safely.
2. Take Advantage of Discounts
Car insurance savings are another method to save money. Discounts include:
- High student discount: Car insurance may be discounted for students with high marks.
- Safe driver discount: Your auto insurance may be discounted if you have no infractions or accidents for a specific time.
- Low-mileage discount: Your automobile insurance may be discounted if you drive fewer than a particular amount of miles each year.
- Multi-policy discount: If you bundle your auto insurance with house or renters insurance from the same insurer, you may earn a discount.
- Multi-car discount: Insuring several cars with the same provider may lower your car insurance.
- Anti-theft device discount: Installing a car alarm or tracking system may lower your auto insurance.
- Safety feature discount: If your automobile includes airbags or anti-lock brakes, your insurance may be lower.
Contact your auto insurance provider or agent to learn about discounts and how much you might save.
3. Consider Changing Your Coverage
Change your coverage to save on auto insurance. Adjusting coverage, deductibles, and limitations may minimize your vehicle insurance prices.
- Coverage levels: Your automobile insurance provider pays how much for claims like bodily injury liability, property damage liability, collision, comprehensive, and uninsured/underinsured motorist. Higher coverage levels provide greater accident protection, but they also increase premiums. cheaper coverage levels provide less accident protection but cheaper premiums. Lowering your coverage to the state minimum or a comfortable level may save you money. However, evaluate the risks and expenses of underinsurance in a major accident.
- Deductibles: Your automobile insurance provider pays for collision and comprehensive claims after you pay your deductible. greater deductibles mean greater accident costs but lower premiums. reduced deductibles mean reduced accident costs, but higher premiums. Raise your deductibles to a level you can afford in case of an accident to save money. In a major accident, a large deductible might be costly.
- Limits: Your automobile insurance company’s maximum payout for bodily injury liability and property damage liability claims are your limits. Higher limits provide greater accident protection, but higher premiums. decrease limits reduce accident protection but decrease premiums. Lowering your limits to the state minimum or a reasonable level may save you money. In a major accident, you should also evaluate the risks and expenses of being sued or paying for losses over your limits.
Contact your auto insurance provider or agent for a quotation with several coverage choices to see how altering your coverage affects your premiums.
Shop Around for the Best Rates
Comparing vehicle insurance prices is another method to save money. Based on price, incentives, customer service, and claims management, car insurance premiums may vary greatly. Thus, before picking a company, compare rates.
Online tools like comparison websites or quote generators may provide you with various quotations from different firms based on your choices and information. You may also directly contact vehicle insurance firms or agents for prices based on your information and choices.
Compare like-for-like rates while comparing firms. Comparing rates with the same coverage, deductibles, and limitations. Thus, you may compare each company’s protection costs fairly.
