Does Car Insurance Go Down at Age 25?

Does Car Insurance Go Down at Age 25?

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Car insurance does go down 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. Yes, car insurance for drivers under 25 is more expensive. But the difference between how much 24-year-olds and 25-year-olds pay on average for car insurance is relatively small — only 11%. Our analysis found that rates go down much more at other one-year intervals.

Read on to learn more details about when car insurance does go down.

When does car insurance get cheaper for young drivers?

Provided they maintain a clean record, young drivers will likely see their car insurance go down after every year driving on the road — but how much it actually decreases by 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 ($300 per month) that 24-year-olds pay on average.

AgeAverage annual premiumDecrease from previous year
18$7,179
19$6,02116%
20$5,33311%
21$4,45317%
22$4,1287%
23$3,8407%
24$3,5976%
25$3,20711%

While your auto insurance premiums may drop at 25, our research found that they will go down the most when you turn 19 (by 16%) and when you turn 21 (by 17%).

The reason why insurance is higher for a person under 25 is because younger drivers are statistically more likely to get into an accident than older drivers — so they're riskier for companies to insure. As young drivers get older, the risk they pose to insurers decreases, and insurers reflect this decrease in lowered premiums.

What age does car insurance go down for males vs. females?

Your car insurance does go down after you turn 25, but not as much as it does on other birthdays. However, unless you live in a state where insurers can't factor gender into insurance rates, one significant change does occur at age 25: the difference between what male and female drivers pay for car insurance. Car insurance goes down for males by 12% at age 25, whereas it goes down for females by 9%.

AgeMale average rateFemale average rateDifference
18$7,561$6,79711%
20$5,590$5,07610%
23$3,965$3,7166.7%
24$3,702$3,4936%
25$3,247$3,1672.5%

Car insurance for a 25-year-old male costs 2.5% more than car insurance for a 25-year-old female, on average. Compared to the difference between what 18-year-old males and females pay (11%) or even what 23-year-old males and females pay (6.7%), that's a much smaller gap.

Statistics reveal why car insurance is so expensive for young male drivers. Research from the American Automobile Association (AAA)'s Foundation for Traffic Safety shows that men spend more time behind the wheel than women do. And according to the National Highway Traffic Safety Administration, the distribution of fatal crashes among drivers ages 21 to 25 differs dramatically by gender: 76% male versus 24% female. 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, however, car insurance rates for male drivers go down so much that at age 32 they start paying slightly less on average than women do.

Does car insurance from major national insurers go down at 25?

We analyzed quotes from four of the largest auto insurance companies — GEICO, State Farm, USAA and Progressive — and found that while car insurance does go down at 25 with each of them, the amount it decreases by varies significantly. Drivers looking for cheap car insurance should consider USAA and GEICO over Progressive and State Farm, as these two companies offer cheaper rates to young drivers.

However, if you hold a policy with USAA or GEICO, your car insurance will decrease only slightly when you turn 25. There is only a 4% difference between USAA's average annual rate for 24-year-olds versus 25-year-olds, and only a 7% difference between GEICO's average annual rates.

Insurer24-year-old average rate25-year-old average rateDifference
USAA$1,747$1,6734%
GEICO$2,266$2,1007%
Progressive$2,992$2,65511%
State Farm$3,091$2,68813%

Conversely, if you hold 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. Other factors can impact 25-year-old car insurance rates more significantly than gender. Here are some of the reasons why your rates may not have gone done once you reached age 25:

  • Experience: If you're a new driver at 25 years old (or over) and it's your first time buying car insurance, then you'll pay far more than a driver who was licensed at 16.
  • Driving history: If you've been in an accident or received a speeding ticket, insurers will consider you a more high-risk driver and charge you accordingly.
  • Credit history: Unless you live in California, Massachusetts or Hawaii, 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 premiums to account for the increased risk of damage or theft.

Be sure to shop around before purchasing a policy. Every insurance company calculates differently, and some insurance companies will emphasize one of these factors more heavily than others. We recommend reassessing your insurer every few years to secure the best rate.

How to get your car insurance down as a 25-year-old driver

If you're a young driver in your 20s, you've likely wondered how to decrease your auto insurance costs. The good news is, drivers of this age can take advantage of several strategies and discounts to make their car insurance rates go down.

Strategies for how to make your car insurance go down

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, however, you should certainly do so, since this is one of the best ways for young drivers to save on their premiums.) Fortunately, there are other ways for 25-year-olds to get their insurance rates to go down.

  • Don't purchase unnecessary coverage. Bought a shiny new sports car? You will likely pay more to insure it, as you'll want collision and comprehensive coverage commensurate with the car's value. As your car's value depreciates over time, however, consider reducing or eliminating collision and comprehensive coverage. If your car is only worth a few thousand dollars, it doesn't make sense to shell out for high premiums to cover an asset of limited value.
  • Team up with your spouse. If you're married and each of you drives separate cars, you may be able to reduce your auto insurance payment by up to 32% through sharing a policy with your spouse, as insurers consider married couples more financially stable and risk-averse.
  • Shop around for the best deal. Our research found that rates for 25-year-old drivers vary dramatically. Erie charges these drivers $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 the high quotes you'll receive from insurers, particularly if you've been expecting your premiums to go down once you hit 25. But by thinking strategically and getting multiple quotes from different insurers, you can lower your rate by hundreds or even thousands of dollars.

Find Cheap Auto Insurance Quotes for 25-Year-Olds

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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-away-from-home or good-student policies, but there are plenty of other ways these young drivers can save on car insurance:

  • Professional and academic organizations: You might not be able to qualify for a good-student discount anymore, but 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 still paying high rates? Consider signing up for a telematics program such as Progressive Snapshot or Liberty Mutual RightTrack. These programs use a telematics-tracking device to monitor your driving performance and reward you with discounts.
  • Defensive driving: By taking a defensive-driving class, you'll not only learn how to drive more safely, but you can reduce your auto insurance premium anywhere from 5% to 20%. Be advised, however, that some states and some insurers only extend this discount to seniors 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 drive infrequently — fewer than 7,500 miles a year — you may be able to score significant savings on your auto insurance premiums. 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 with your auto 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 upfront, many insurers will give you a discount of 5% to 10%.
  • E-bill or auto payment: Don't want to deal with the hassle of paper bills? Neither do insurers, and some will give you a discount of 5% to 10% for using an e-bill or an electronic fund transfer.
  • Safety features: Does your car have certain safety features, such as anti-lock brakes or daytime running lights? You could receive an auto discount because of it.

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.

Sources

Nancy is a Technical Writer at ValuePenguin, focusing primarily on auto insurance. Prior to joining the ValuePenguin team, she worked as a public relations professional, helping clients develop and publish op-eds in outlets such as CNN, U.S. News and USA Today. She holds a master's degree in English from Georgetown University.

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.