Car Insurance for Recent Graduates
Which car insurance companies cater to recent college grads?
On average, drivers younger than 25 pay more for car insurance than do drivers in any other age bracket. However, there are some ways that recent graduate drivers can save on insurance coverage, starting by comparing quotes from top insurance companies. While there isn’t a set age for recent grads, many do fall within the 21-to-25 cohort. Let’s explore the cheapest car insurance providers for recent graduates and review some helpful policy information worth being aware of.
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Top 10 car insurance companies for college graduates
According to The Zebra's insurance rating methodology, USAA is the cheapest car insurance companies for drivers between the ages of 22 and 25. At $1,730 for an annual policy, USAA is $522 cheaper than the group average.
If you’re not a military member or veteran — or related to one — consider GEICO. At $1,867, GEICO's average rate is $405 cheaper than the group average (methodology). Although this isn’t representative of every recent graduate driver, you can enter your ZIP code below to find personalized rates. Bonus tip: don't forget to investigate each car insurance provider's customer satisfaction rating.
The Zebra’s Dynamic Insurance Rating Tool data methodology — auto insurance
The auto insurance rates displayed throughout this page come from The Zebra’s Dynamic Insurance Rating Tool, a proprietary insurance premium estimator that uses the most recent rate filings across the United States at the ZIP code level to provide up-to-date rate data. Most insurance companies file car insurance rates one to two times a year. This data comes from Quadrant Information Services, which sources the latest approved rate filings across carriers in each state from S&P Global. Quadrant then uses an internal QA process to validate the information and build reports before the data is programmed into The Zebra’s dynamic rating tool.
Rates are based on a sample driver profile — a 30-year-old single male driver with a Honda Accord and full coverage at these levels:
- $50,000 per person/$100,000 per incident for bodily injury liability
- $50,000 per incident for property damage liability
- $500 deductibles for collision and comprehensive coverage
To provide insight to consumers on how specific personal factors (like age, location and coverage level) can affect your premium, this base profile is then adjusted for different factors commonly used by insurance companies. For more information, see our full data methodology.
One of the most popular insurance providers in the U.S., GEICO is $137 more expensive per annual policy than USAA but does not have any membership requirements.
The third-cheapest for drivers between the ages of 22 and 25 is Nationwide. With an average monthly rate of $162 per month, Nationwide could be an affordable option for a policy.
State Farm costs a bit less than the group average. They offer a wide range of insurance products like home, renters, and motorcycle.
While they only offer auto insurance at this time, 21st Century costs about $185 per month for young adult drivers.
Farmers is one of the oldest insurance companies in the US — and one of the most recognizable. Farmers policies cost a little more than the group average for young adults.
Progressive charges $112 more for an annual policy than the group average, with a monthly cost of about $199.
Rated by JD Power as having above-average customer service, Amica costs about $210 per month for young adult drivers.
An auto insurance policy through AAA is on the pricey end for young adult drivers, with a monthly expense of over $200. Per annual policy, AAA costs $308 more than the group average annually.
The most expensive provider for our user profile, Allstate offers a telematics program to help young drivers save on auto insurance.
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Other ways to save on car insurance
Although shopping around and comparing rates from different insurance providers is the best way to find cheap car insurance, there are other solutions worth keeping in mind.
Consider a telematics program
Telematics are in-car devices that monitor the way you drive in order to more accurately determine your premium. With traditional auto insurance, non-driving related characteristics are used to determine your rates. With telematics, your premium will be determined by driving habits, including:
- Acceleration speed
- Time of day driven
- Overall speeds
Telematics discounts from popular carriers
Below are some common discounts you could expect from popular providers in the US.
|Average of $130
|Average of 10-25%
|State Farm Drive Safe & Save
|Up to 15%
|Up to 40%
|Liberty Mutual RightTrack
|Average of 5-30%
|Root Car Insurance
Bundle your renters or homeowners policies with your auto insurance
Consider bundling your renters insurance or homeowners policy with your auto insurance from the same company. This will simplify the payment process and potentially provide a discount. On average, you can save $149 annually by bundling your home and auto policies.
For more information regarding bundling, see our additional content:
Insurance companies use personal attributes correlated with risky driving tendencies. As it relates to your post-grad life, insurance companies actually see a driver with more education as more responsible. This is why greater educational attainment may lead to lower auto insurance rates.
|Avg. Annual Premium
Be careful with your credit
Your credit score is another non-driving rating factor used by car insurance providers to price your premium. On average, a driver with very poor credit (300-579) will pay almost $500 more than what someone with good credit would pay per six-month policy period. If you have student loans after you graduate, be sure to keep up with them to avoid any increases to your premium.
|Avg. Annual Premium
Be smart with your insurance coverage
If you have an older vehicle, consider whether having collision or comprehensive coverage is worth it. Unlike liability insurance, these coverages are only required if you’re leasing your vehicle or have a loan on the vehicle. If your car is paid off and the value of the vehicle is less than $4,000, you might benefit from reducing coverage. While the cost of coverage options will depend, they can account for half of your monthly payments.
Bear in mind, however, that by doing this you put yourself at risk if you're in an at-fault accident as comprehensive and collision protect your car. So, if you still want full coverage for your vehicle in the event of an accident, keep comprehensive and collision.
You can determine the value of your vehicle via Kelley Blue Book and NADA online. If your vehicle is worth more than $4,000, consider raising your deductible. Because your premium and deductible are inversely related, a high deductible will lower your monthly payments.
Car insurance when moving out of state
A big factor to consider after you graduate is the idea of relocation. Whether that means returning to your hometown or getting a job elsewhere, moving can have big impacts on your driving life for a couple of reasons. Let's explore.
Insurance by state
Insurance is state-regulated and ZIP code specific — meaning every state has its own laws regarding their insurance coverage. So, if you’re moving from one state to another, you need to get a policy that is written for the state and rated for the ZIP code you would be moving to.
Registration and driver's license regulations
When you move to another state, you need to make sure you update your driver's license and your vehicle's registration information. In order to update your driver's license, you will need the following information:
- Identification: Your current license and additional forms of identification, such as your social security card
- Proof of residence at your new address: Usually two forms, such as utility bills or some kind of invoice
- Money: There will be associated fees with this process
Your vehicle is registered with your state DMV department so you will need to update it prior to moving. Be aware, you generally must register your car in your new state within a certain period of time. Usually, the process is pretty straight forward. You will need the following ready:
- Your identification and vehicle information: Your driver’s license and VIN
- Proof of ownership: Lien statement or title
- Odometer disclosure statement: This requirement varies by state
- Emissions disclosure statement: This requirement varies by state
- Bill of sale: This requirement varies by state
After this, you will need to prove you have insurance, get the vehicle inspected, then complete the registration form. Some DMVs allow you to do this online; others require you to go to the DMV in-person. Then, you will receive your new license plates for your new state.
Can you stay on your parents' insurance plan?
Unlike health insurance, you cannot age out of an insurance policy. However, leaving a parents' address and taking a car with you can make you ineligible. Because car insurance is ZIP code-specific, your policy needs to priced for the garaging address the vehicle is at the majority of the time.
If you get a job in another city and move, you will need an insurance plan for your new residence. Bear in mind, your parents can still pay for it — an insurance company doesn’t care who pays the bills, as long as they are paid.
Car insurance and roommates
Once you graduate from college, it’s likely you will have a roommate or two — it's cheaper than living alone, and, depending on the roommate, it can be fun. Your insurance company understands living with other people, but they do have some concerns that can complicate your relationship with your insurance company.
As you and your roommate are sharing a space, your insurance company worries that you will share vehicles. Unless you share a policy with your roommate, your insurance company isn’t pricing your premium to cover an additional driver. Check out our guide to car insurance with roommates if you're looking for information.
If you and your roommate will be sharing vehicles, you should add them to your policy. This will not only ensure any damage they cause to your vehicle or others is covered, but it can come with a multiple-driver discount. This will cause your premium to increase — especially if your roommate has bad credit or a poor driving record.
If your roommate does not use your vehicle, there’s no reason for them to be added to your policy. Your insurance company might require they be excluded from your policy because they’re living at your address. An insurance company will request you to exclude a driver if they’re worried they could potentially be using the vehicle without being a chargeable driver. In the event the excluded driver causes damage, they could refuse to provide coverage.
Summary: car insurance after graduation
The important takeaway for car insurance after you graduate is to shop for a new plan every six months. If you’re a young driver, each birthday will lower your insurance premium by hundreds of dollars. Enter your ZIP code below to start comparing rates today.
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About The Zebra
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
- The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
- The Zebra’s insurance editorial content is not subject to review or alteration by insurance companies or partners.
- The Zebra’s editorial team operates independently of the company’s partnerships and commercialization interests, publishing unbiased information for consumer benefit.
- The auto insurance rates published on The Zebra’s pages are based on a comprehensive analysis of car insurance pricing data, evaluating more than 83 million insurance rates from across the United States.