Best Car Insurance for Millennials
Best Car Insurance for Millennials
The most affordable insurer for you will depend on your age, credit and driving history. Finding the right company can help millennials save more than $130 per year.
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We recommend Nationwide as the best car insurance company for millennial drivers, based on our analysis of the largest insurers in the U.S. When it comes to drivers with both average and worse-than-average credit, an issue all too common among those who entered the workforce in the 2000s, Nationwide was most commonly the most affordable option.
Both Geico and Progressive were also strong options for millennial drivers looking for good rates. Geico, in particular, offers a consistently top-rated app as more insurance is handled online.
The millennial generation is a group in an unusual spot. Long-discussed as a younger cohort, millennials are now between 25 and 40 years old. Their arrival at stages of financial independence and life milestones, such as buying a home and starting a family, has come through a slew of economic disruptions, including the coronavirus pandemic.
Cheapest insurance for millennials: Nationwide
Across four age groups in the millennial generation, Nationwide was our pick as the top option, as it offered the best overall car insurance rates for full coverage, edging out Geico by $25 per year among widely available insurers. One element that was notable was Progressive actually offered the best rates for 25-year-olds and 40-year-olds, but on average, Nationwide offered the lowest rates overall.
USAA was the cheapest option overall, but it is only available to members of the military, veterans and some of their relatives. If you can get USAA, it is the most affordable option in most cases.
Insurance rates typically go down as drivers get older, as younger drivers are more apt to take risks on the road. In many cases, young drivers are also less financially stable and settled.
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Progressive: Best rates for 25-year-old drivers
Among major insurance companies, Progressive's average rate came in $10 cheaper than Geico's at $2,025 per year. Nationwide was only $30 more expensive than Progressive. Younger drivers tend to see fairly expensive rates, and age 25 is around when many companies start lowering rates significantly. This means younger drivers in the millennial generation will likely soon see their insurance costs start to fall.
Geico: Best rates for 30-year-old drivers
Geico's rates for 30-year-olds averaged $1,613 across the three-state sample. That was more than $120 cheaper than Nationwide's offerings. On average, major insurers charged 30-year-old drivers $1,925 per year, with only State Farm and Allstate charging more. At age 30, most are still a good bit away from purchasing a home. The 30-year-old age group was leaving high school in the middle of the 2007-2008 financial crisis.
Nationwide: Best rates for 35-year-old drivers
Nationwide's rates for 35-year-olds were on average $67 cheaper than those of the rest of the major insurers. Nationwide's annual price of $1,690 was better than Progressive's $1,757 rate and Geico's $1,811 rate. According to Zillow, the average age of a first-time homebuyer is 34. That means drivers in this age group will likely be in different situations credit-wise and can bundle auto and home policies.
Progressive: Best rates for 40-year-old drivers
In addition to offering the lowest rates for 25-year-olds, Progressive also offered the best rates for older drivers. The average price for a full coverage annual premium was $1,644 and just barely edged out Nationwide's $1,653 rate. On average, 40-year-old drivers paid 18% less than 25-year-old drivers in the study.
Cheapest insurance for millennials with bad credit: Nationwide
Nationwide is our recommendation for drivers with below-average credit, as the company's average rate for millennial drivers with bad credit was $132 less per year than the next-cheapest major insurer. The worse-than-average credit rating increased average rates by 11%.
- Nationwide: Best for 25-year-olds with bad credit
- Geico: Best for 30-year-olds with bad credit
- Nationwide: Best for 35-year-olds with bad credit
- Nationwide: Best for 40-year-olds with bad credit
Geico offered the second-best rates for 25-year-olds with bad credit. Progressive had the second-best rates for both 35- and 40-year-old drivers. USAA also offered low rates, but the insurer is only available to those that qualify with military ties. Millennials came of age as the college debt bubble took off, meaning debt and credit issues are unfortunately common.
Best-rated apps for major insurers
Millennials for the most part grew up in the digital age and are more fluent than previous generations in terms of operating online. That means a higher level of comfort with handling online tasks as insurance companies create more avenues to interact with policyholders on the internet.
Every major insurer in the study has a phone app, and many use apps to track driving for telematics or pay-per-mile programs. Some of the apps are better reviewed than others according to Apple and Android users.
Apple Store rating (out of 5)
Google Play app store (out of 5)
Tips for millennials looking to save money on insurance
Millennial drivers, like anyone else looking to get behind the wheel, are trying to get the most coverage at a good price, and there are a few helpful things they can do to that end. Insurers offer a variety of ways to save money on a policy.
- Hunt for discounts: Insurers offer discounts for things such as good driving, being a good student, installing anti-theft devices on vehicles or bundling multiple policies. That last one could include renters insurance or homeowners insurance as millennials move into the homebuying stage of their financial lives.
- Enroll in usage-based insurance programs: Most major insurers and some smaller specialty insurers will provide discounts if policyholders allow their driving to be tracked. To get the maximum benefit, you must drive smoothly and attentively. In some cases, there is a risk of higher prices.
- Work on improving your credit: Drivers with better credit get lower rates nearly universally. Staying on top of bills and paying off debt could lower your insurance costs.
- Get quotes from multiple insurers: Looking at multiple options is always a good way to ensure you're getting a better deal. National insurers have the advantage of scale to keep prices down, but some local options can deliver low rates as well.
Pay-per-mile insurance options for millennials
Pay-per-mile insurance is one avenue for millennials looking to save money, especially if they work from home or don't use a car to commute. That type of insurance allows drivers to pay a lower base rate and then a small fee, usually less than 10 cents, for each mile they drive.
The coronavirus pandemic led to many more people working at home, and pay-per-mile is often cheaper than traditional insurance for noncommuting drivers. However, millennials are also leaving cities as they get to middle age, which means less access to public transit or walking to work. Some popular options for pay-per-mile coverage include:
Frequently asked questions
Why is insurance more expensive for younger drivers?
Young drivers tend to get in more accidents and therefore tend to be more expensive for companies to insure. This is both because they are less experienced behind the wheel and because younger people are more prone, on average, to risky behavior.
What insurance do I need if I finance a car?
In the vast majority of cases, you will need comprehensive, collision and liability insurance. Every state requires a minimum amount of liability coverage. The company financing your auto loan will likely require collision and comprehensive, as those coverages protect your vehicle from accidents and other damage such as hail or theft.
How much insurance do I need?
At the very least, you will need the state minimum level of liability. Usually, it is advisable to get more than the minimum, as accidents involving bodily injury frequently require a larger payout than that can cover. If you have an expensive vehicle, would prefer not to deal with a large repair bill or just want your own vehicle protected, adding comprehensive and collision coverage could be an appealing option.
How do I improve my credit?
The best ways to improve your credit score are to pay your bills in full and not use too much credit. It also helps to have older, established lines of credit, so if you are just starting out, establishing at least one line of credit is important. However, requesting too many lines of credit in a short period of time can hurt your credit score.
Do I need insurance if I don't have a car?
If you are still doing a lot of driving, especially in terms of borrowing cars belonging to someone else, the answer is yes. If you are renting cars, you can pay for insurance from the rental company, but that will be costly if done often. If you allow your insurance to lapse, you will likely pay higher rates when you purchase your next policy.
To determine the best rates for millennials, data was collected for 25-, 30-, 35- and 40-year-old drivers in Ohio, Pennsylvania and Georgia. Our sample driver had a 2015 Honda Civic EX and purchased a full coverage policy. Drivers either had average or below-average credit.
This analysis used insurance rate data from Quadrant Information Services that was publicly sourced from insurer filings. Quotes should be used only for comparative purposes.
Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.