How does auto insurance change after your college graduation?
On average, drivers younger than 25 pay more for car insurance than do drivers in any other age bracket. 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 companies for recent graduates and review some helpful policy information worth being aware of.
According to The Zebra's insurance rating methodology, USAA is the cheapest car insurance provider for drivers between the ages of 22 and 25. At $658 for a standard six-month policy, USAA is $319 cheaper than the group average.
|3. State Farm||$862|
|7. Liberty Mutual||$1,035|
If you’re not a military member or veteran — or related to one — consider GEICO. At $745, GEICO's average rate is $233 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.
Only available to military members and their families, USAA is the cheapest insurance provider for the group we selected. About $54 less per month than the other providers, USAA has high customer service reviews according to JD Power.
One of the most popular insurance providers in the U.S., GEICO is $86 more expensive per six-month policy than USAA but does not have any membership requirements.
The third-cheapest for drivers between the ages of 22 and 25 is State Farm. With an average monthly rate of $143 per month, State Farm could be an affordable option for a policy. Read our full review of State Farm.
Rated by JD Power as having above-average customer service, Amica costs about $162 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. Read our review of Farmers insurance.
An auto insurance policy through AAA is on the pricey end for young adult drivers, with a monthly expense of over $200. Per six-month policy, AAA costs $247 more than the group average. Learn more about AAA's coverage options in our review.
The most expensive provider for our user profile, Allstate offers a telematics program to help young drivers save on auto 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.
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:
Below are some common discounts you could expect from popular providers in the US.
|Progressive SnapShot||Average of $130|
|Allstate Drivewise||Average of 10-25%|
|State Farm Drive Safe & Save||Up to 15%|
|Nationwide SmartRide||Up to 40%|
|Liberty Mutual RightTrack||Average of 5-30%|
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.
|Education Level||6-Month Premium|
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.
|FICO Credit Tier||6-Month Premium|
|Very Poor (300-579)||$1,447|
|Very Good (740-799)||$812|
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.
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 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.
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:
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:
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.
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.
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. If you're looking for information related to car insurance with roommates, see more here.
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.
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.
If you're looking for more specifics regarding ways to save on car insurance, see our additional articles here