Car insurance for 25-year-olds: a guide

 

Insurance gets cheaper when you turn 25 — at least for most drivers. While 25-year-old drivers do pay more than the national average, their premiums decrease by $170 per year just by virtue of turning 25 and no longer being designated as a "young driver." On average, 25-year-old drivers pay $827 per six-month policy.

Finding cheap car insurance is important at any age, so let's explore some ways to save on car insurance premiums — such as always comparing quotes — at the age of 25.
 


How much does car insurance cost for a 25-year-old?

 

The average car insurance rate for a 25-year-old driver is $1,653 per year — about $138 per month or $827 for a standard six-month policy. However, your auto insurance rate can vary based on a number of factors. A recent car accident or other traffic infractions can increase your auto insurance premiums. Even the insurance provider that you choose can have a big impact.

Read on to discover ways to find cheap auto insurance.

 

What is the cheapest car insurance company for a 25-year-old driver?

Based on our research, USAA and State Farm provided the most affordable auto insurance rates for 25-year-olds. In order to find the cheapest car insurance policy, we created a user profile for our methodology and gathered premiums from some of America's most popular companies, which you can see below.

 

AVERAGE INSURANCE RATES BY COMPANY — 25-YEAR-OLD DRIVER
CarrierAvg. 6 Mo. PremiumAvg. Monthly Premium
Allstate$1,476$246
Farmers$1,133$189
GEICO$1,161$193
Liberty Mutual$1,537$256
Nationwide$1,120$187
Progressive$1,003$167
State Farm$901$150
USAA$783$130

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How to find cheap car insurance at age 25

 

Now that we've covered how your age impacts your premium, let's break down some quick ways to reduce your rates.

 

Avoid collision claims

Accidents happen — but that doesn't mean you need to file a claim. Depending on the value of damage, you can pay more in increased insurance premiums than out-of-pocket damages. For example, you live in Texas and damaged your vehicle while backing out of your driveway — no other vehicles involved. The out-of-pocket expenses are $1,400.

In 2020 in Texas, the average collision claim increased rates $747 per year. Because most insurance companies will increase your rates for three years after an accident (at minimum), you can expect that $801 to equate to $2,241 total. If you have a $500 deductible, the total expense of the accident is $2,741. If you had paid for the damage yourself instead of going through your insurer, you could have saved $1,341.

For more information, see our guide to auto insurance claims.

 

Reduce your coverage after 10 years of ownership

If your vehicle is 10 years or older or worth less than $4,000, consider dropping your collision coverage. This coverage is designed to protect the physical integrity of your vehicle, but if it isn't worth much you could be paying for coverage you do not need. You can determine the value of your vehicle by using Kelley Blue Book. If it's determined you do not need your collision coverage, consider keeping your uninsured/underinsured motorist coverage. This will cover any property damage done to your vehicle after an accident with an uninsured driver — for example, a hit and run. Furthermore, you should also keep your comprehensive coverage to prevent weather, animal and theft-related damage to your vehicle.

 

Double-check for discounts

Many discounts will be automatically added to your policy based on the VIN of your vehicle or your driving history. However, there are some you need to look or apply for in order to qualify. Below are some common auto insurance discounts.

Participate in telematics programs

Telematics, or usage-based insurance providers, use the way you drive in order to determine your premium. Here, your driving habits can earn you a discount on your premium. By avoiding harsh braking, high acceleration speeds, and late-night drives, you can save on your auto insurance policy. 


Frequently asked questions

 

Below you'll find some of the most commonly asked questions about car insurance for 25-year-olds. 

 

Does car insurance go down at 25?

In general, safe drivers can expect their car insurance rates to drop at 25, as much as $170 per year in some cases. However, turning 25 is not as significant to insurers as moving into your 20s from your teenage years. Teen drivers will almost always face higher premiums due to their inexperience. Essentially, while moving up into your late 20s is generally viewed positively by your insurance company, 25-year-old drivers with a long claims history or a poor driving record may not see lower rates at all. To find the best rates, it pays to keep a clean driving record, a good credit score and keep traffic violations to a minimum.

 

Does car insurance continue to drop after 25?

In general, most drivers find that their insurance rates will continue to steadily decrease as they get older. As drivers get closer to 30, the rates become more affordable, with the average yearly car insurance premium for a 30-year-old in the U.S. coming in at $1,486. That's an annual savings of $167. Rates tend to continue to become lower for certain age groups, particularly those in their 50s and 60s where rates become lowest. In short, along with car insurance discounts and the methods of saving outlined above, one of the best ways to save on car insurance is to simply keep getting older.

 

Why does car insurance drop at 25?

The cost of car insurance usually decreases after 25 for a number of reasons. Driving experience is a major factor, as more experienced drivers tend to be safer and file fewer claims. As drivers move into full-fledged adulthood, other factors can come into play as well, including your credit score, the type of car that you drive and even your marital status. These can all have a positive impact on your auto insurance rates. 

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Ross Martin LinkedIn

As a licensed insurance agent, Ross is responsible for researching and writing about all matters related to insurance. He has a background in writing and education, as well as a master's degree from Royal Holloway, University of London. He has been quoted by CNET, iDriveSafely.com and Kin Insurance.