Does Car Insurance Go Down at Age 25?
The cost of car insurance goes down by about 11% when you turn 25.
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Car insurance does get more affordable at 25. The average price of car insurance for a 25-year-old is $3,207 for an annual policy. By contrast, drivers pay an average of $7,179 at 18 and $4,453 at 21, which demonstrates that car insurance does go down as you age. However, this milestone isn't as magical as you might think.
When does car insurance get cheaper for young drivers?
If young drivers have a clean record, they will likely see their car insurance rates go down after every year of driving, but the decrease varies from year to year. Auto insurance for 25-year-olds costs $3,207 on average for an annual policy, or $267 per month. That's only 11% cheaper than the $3,597, or $300 per month, that 24-year-olds pay on average.
Annual car insurance rates by driver age
Age | Average annual rate | Drop from previous year |
|---|---|---|
| 18 | $7,179 | |
| 19 | $6,021 | 16% |
| 20 | $5,333 | 11% |
| 21 | $4,453 | 17% |
| 22 | $4,128 | 7% |
| 23 | $3,840 | 7% |
| 24 | $3,597 | 6% |
| 25 | $3,207 | 11% |
While your auto insurance rates may drop at age 25, they will go down the most when you turn 19 (a 16% savings) and when you turn 21 (a 17% drop).
The reason car insurance is expensive for drivers under age 25 is because younger drivers are statistically more likely to get into an accident than older drivers. They're riskier for companies to insure because they don't have as much driving experience, so they pay higher rates.
At what age does car insurance go down for male vs. female drivers?
Unless you live in a state where insurers can't factor gender into insurance rates, another major change occurs at age 25: the difference between what male and female drivers pay for car insurance. Car insurance goes down for men by 12% at age 25, whereas it only goes down 9% for women.
Annual auto insurance cost by age and gender
Car insurance for a 25-year-old man costs 2.5% more than car insurance for a 25-year-old woman, on average. Compared with the difference between what men and women pay at age 18 (11%), or even 23 (6%), that's a much smaller gap.
Statistics show why car insurance is so expensive for young male drivers. Research from the American Automobile Association's (AAA) Foundation for Traffic Safety shows that men drive more aggressively than women do. And according to the National Highway Traffic Safety Administration, men ages 21 to 25 are nearly three times more likely to be involved in a fatal car crash than women of the same age range.
Insurers charge male drivers more to account for this difference in risk.
In certain states, however, it is illegal for insurers to include gender in their rate calculations. These states include:
- California
- Hawaii
- Massachusetts
- Michigan (in certain areas)
- Montana
- North Carolina
- Pennsylvania
No matter what state you live in, car insurance rates for male drivers go down as they age. At age 32, the cost of insurance for men and women is nearly identical.
How much do car insurance rates go down at age 25?
Car insurance does get cheaper at 25 , but the percentage decrease varies a lot depending on the company.
Of the largest auto insurance companies — Geico, State Farm, USAA and Progressive — USAA and Geico have cheaper rates for young drivers than Progressive or State Farm.
However, if you have a policy with USAA or Geico, your car insurance will decrease only slightly when you turn 25. There is only a 4% decrease in USAA's average annual rate for 25-year-olds versus 24-year-olds and only a 7% decrease in Geico's average annual rates for the same ages.
Insurer | 24-year-old average rate | 25-year-old average rate | Decrease |
|---|---|---|---|
| USAA | $1,747 | $1,673 | 4% |
| Geico | $2,266 | $2,100 | 7% |
| Progressive | $2,992 | $2,655 | 11% |
| State Farm | $3,091 | $2,688 | 13% |
If you have a policy from Progressive or State Farm, your insurance will go down far more when you turn 25. Average car insurance rates from State Farm go down by about 13% between the ages of 24 and 25, and at Progressive, they go down by about 11%.
Why isn't my car insurance going down at 25 years old?
Rates don't necessarily drop as soon as you turn 25. Factors other than age and gender can have a bigger effect on car insurance rates for a 25-year-old.
- Experience: If you're a new driver at 25 years old (or older) and it's your first time buying car insurance, then you'll pay far more than a driver who got their license at 16.
- Driving history: If you've been in an accident or get a speeding ticket, insurers will consider you a more high-risk driver and charge you accordingly.
- Credit history: Unless you live in one of the few states that have made it illegal to factor credit into rates, a lower credit score may increase your car insurance rates.
- ZIP code: If you move to a neighborhood with higher rates of theft and vandalism, then insurers will charge you higher rates to account for the increased risk of damage or theft.
Compare cheap car insurance quotes before buying a policy. Every insurance company determines rates differently, and some insurance companies will emphasize different factors more heavily than others. Get new quotes every year to make sure you're getting the best rate.
How to get cheaper car insurance as a 25-year-old driver
If you're a young driver, you've likely wondered how to decrease your auto insurance costs. The good news is, drivers in their 20s can take advantage of several strategies and discounts to make their car insurance rates go down.
How to save on your car insurance
By the time you hit age 25, you've likely passed the point where you can stay on your parents' insurance. (If you have not, you should certainly do so, because this is one of the best ways for young drivers to save on their insurance.) Fortunately, there are other ways to get insurance rates down.
- Don't buy unnecessary coverage. If you buy a shiny new sports car, you will likely pay more to insure it, as you'll want collision and comprehensive coverage amounts that are in line with the car's value. As your car's value depreciates over time, however, consider reducing or eliminating collision and comprehensive coverage. And if you're already driving around a car worth only a few thousand dollars, focus on your liability coverage and skip extra protection for your own car.
-
Team up with your spouse. If you're married and each of you drives a separate car, you may be able to reduce your auto insurance payment by up to 11% by sharing a policy, as insurers consider married couples more financially stable and risk averse.
- Shop around for the best deal. Rates for 25-year-old drivers vary dramatically: Erie charges $1,518 for an annual policy, while Allstate charges $5,074 — more than three times as much. Make sure you periodically shop around for the best deal.
It's easy to get frustrated by high quotes from insurers, particularly if you've been expecting your rates to go down once you hit 25. But if you act strategically and get multiple quotes from different insurers, you can lower your rate by hundreds, or even thousands, of dollars.
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Discounts for 25-year-old drivers
As you shop around for the best rate, make sure you're also asking insurance companies about all applicable discounts. Twenty-five-year-old drivers might not be able to take advantage of student discounts anymore, but there are plenty of other ways to save on car insurance.
- Professional and academic organizations: While you might not qualify for a good-student discount anymore, your university may have partnered with an insurance company to secure discounts for alumni. Trade associations and professional organizations often do the same, so be sure to check which discounts you can get based on your job or degree.
- Accident free: Been accident free for three to five years? You may qualify for an accident-free or good-driver discount. While most insurers apply this discount automatically, be sure to ask, so you know you are getting the maximum benefit.
- Telematics: Know that you're a safe driver, yet you’re still paying high rates? Consider signing up for a telematics program, such as Progressive Snapshot or RightTrack by Liberty Mutual. These programs use a tracking device to monitor your driving performance and reward you with discounts.
- Defensive driving: By taking a defensive-driving class, not only will you learn how to drive more safely, but you can also reduce your auto insurance rates anywhere from 5 to 20%. Be advised, though, that some states and some insurers only extend this discount to senior citizens or drivers under 25. Check with your insurance company to see if you qualify before you sign up for a class.
- Low mileage and usage: If you don't drive often — less than the national average of 14,000 miles per year — you may be able to score major savings on your auto insurance quotes. You might also consider switching to pay-per-mile car insurance if you are confident your mileage will stay low.
- Bundling: If you bundle your renters insurance or your homeowners insurance with your auto insurance, your insurer will likely reward you with a discount, often ranging from 5 to 25%.
- Paid in full: If you can pay the entire cost of your six-month or annual policy up front, many insurers will give you a discount of 5 to 10%.
- E-bill or automatic payment: Don't want to deal with the hassle of paper bills? Neither do insurers, and some will give you a discount of around 5% for using an e-bill or an electronic funds transfer.
- Safety features: Does your car have certain safety features, such as antilock brakes or daytime running lights? You could get an auto discount because of them.
Ask about these discounts when you call insurance companies for a quote. You may be surprised at the savings you're able to generate simply by asking questions.
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