Don't stress about car insurance in your 20s — check out our tips and learn how to save!
In their 20s, drivers pay an average of $1,989 per year for car insurance — substantially more than the national average for all ages. While not considered as risky as teen drivers, motorists in their early 20s are riskier to insure than their more experienced counterparts. Whenever a driver is viewed as a risk by an insurance company, it will result in more expensive insurance rates.
Let's explore some ways to save money on car insurance as a 20-year-old driver.
Using a sample driver profile outlined here, we took average annual premiums for 20-year-old drivers to determine which company offered the most affordable rates. For qualifying 20-year-old drivers, USAA offered the cheapest rates. GEICO was the next-cheapest option for a car insurance quote.
| Insurance Company | Average Annual Premium |
|---|---|
| Allstate | $2,636 |
| Farmers | $2,020 |
| GEICO | $1,438 |
| Liberty Mutual | $2,686 |
| Nationwide | $1,582 |
| Progressive | $2,287 |
| State Farm | $2,379 |
| USAA | $1,261 |
Your 20s can be a time of personal, professional, and financial flux. On average, drivers aged 20 to 24 pay over $800 more for car insurance each year than drivers between the ages of 25 and 29 do. This has to do with the increased risk of insuring a younger driver versus a more experienced motorist. Drivers aged 25 to 29 file fewer claims and enjoy more affordable auto insurance premiums.
In order to find the cheapest car insurance company for young drivers, we got rates for drivers aged 20 to 24 from popular insurance companies in the US.
| Car Insurance Company | Average Annual for Young Drivers |
|---|---|
| Allstate | $3,064 |
| Farmers | $2,380 |
| GEICO | $1,656 |
| Liberty Mutual | $3,411 |
| Nationwide | $1,907 |
| Progressive | $2,749 |
| State Farm | $2,909 |
| USAA | $1,439 |
Until your 25th birthday, gender is a considerable car insurance rating factor. Auto insurance companies look at risk exposure (the probability you will get into an accident and they will have to pay out a claim) when calculating premiums. To an auto insurance company, a 20-year-old male driver poses a greater risk than a female driver. Males pay $173 more than the average cost for car insurance than females over the course of a six-month premium cycle. Take comfort in the fact that across all age groups, men pay only $1 more per year than women.
| Age | Difference |
|---|---|
| 19 | $235 |
| 20 | $173 |
| 21 | $154 |
| Average | $187 |
Although it might feel like you’re going to pay an arm and a leg because of your age, there are some things you can do to save on your car insurance policy even if you’re a young driver.
The best advice we can give is to compare the offerings of as many car insurance companies as possible. Rates vary substantially based on the car insurance company. Keep in mind, the car insurance premiums we presented above are based on a generic user profile. The only way to find rates suited for you is to get a quote from as many different companies as possible. Enter your ZIP code below to see personalized estimates!
Most car insurance companies offer a discount to good students between the ages of 16 and 25. If you have a 3.0 GPA or above (on average), your car insurance company may offer you a student discount. The reason for this has less to do with a reward for academic success, but the way insurance companies view young adults with good grades. Returning to this idea of risk management, car insurance companies see high performing students as less likely to take risks while driving — all of which makes them a cheaper client. Combined with a defensive driver discount, you can save an average of $189!
| Age | Male | Female |
|---|---|---|
| 19 | $278 | $160 |
| 20 | $238 | $139 |
| 21 | $202 | $117 |
For more information on car insurance discounts for students, see our guide here.
If you’ve taken a defensive driving class, meaning a professionally instructed class that your car insurance company usually must approve of ahead of time, you may be entitled to a discount. Like having good grades, car insurance companies see those who have completed these types of courses as safer and cheaper clients.
Car insurance can be a double-edged sword. The more you use it, the more it costs. After you file a claim, your insurance provider could assess an accident surcharge for three to five years. Looking at our data below, you can see this increase over the course of three years can be as much as your total premium in a year. As such, the general rule of thumb in the insurance world is if you can cover the damages out-of-pocket and you're the at-fault driver, pay for the damages yourself.
| Increase at 6 months | Increase at 12 months | Increase at 3 Years |
|---|---|---|
| +$291 | +$582 | +$1,746 |
If you’re unsure of whether or not to file a claim for damages to your vehicle, use this handy breakdown.
Collision car insurance claims have the greatest impact on your auto insurance rates and driving record. Not-at-fault accidents or comprehensive claims typically don’t raise your rates as dramatically as at-fault collisions.
As your vehicle ages, it loses value. In terms of your car insurance, this means that the coverage you once had on your 2000 Civic might not be necessary anymore. A general rule of thumb in the world of car insurance is if your vehicle is worth less than $4,000, you probably don’t need physical protection. On average, comprehensive and collision coverage make up about half of your premium.
If you’re living in an apartment or house, you should have a renter’s insurance policy. A renter’s policy will cover you (your liability) as well as personal property damage in the event of a covered claim. Compared to car insurance, renter’s policies are quite inexpensive — about $150 a year. But if you get your renter’s policy from the same insurance company as your auto, you can expect a multi-policy discount.
| Renters | Renters with Multi-Policy |
|---|---|
| $1,323 | $1,250 |