Car Insurance for 20 year olds

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What is car insurance for your 20s?


Your roaring 20s are exactly that — full of turbulence, highs, and lows, wins and crushing losses. You’re just starting to get figure out who you are and what you want as a functioning adult. During this time, insurance is probably the last thing on your mind. Still, the amount of changes you go through as a 20-something can have huge insurance implications and not all of them are easily recognizable. Here is your guide for navigating insurance in your 20s.


We're going to break your 20s into three sections:

  1. Your early & mid 20s
  2. Your late 20s
  3. Your 20s: summarized

National Average Annual Auto Insurance Premiums by Age Range

Age Group Avg. Annual Premium
16-19 $4,957
20-29 $1,791
30-39 $1,292
40-49 $1,235
50-59 $1,151
60-69 $1,185
70-79 $1,390
80-85 $1,644


As you can see, your 20s can be a pretty pricey time. You're still considered a risky customer to insurance companies because of your lack of driving experience. On average, 20-year-olds pay almost $500 more for car insurance than the national average (national average being $1,323 annually).



Your Early and Mid 20s: the Basics


National Average Annual Auto Insurance Premiums for 20-year-olds

Age Group Avg. Annual Premium
20 $2,891
21 $2,243
22 $2,023
23 $1,869
24 $1,757
25 $1,462
26 $1,444
Average Early 20s $2,256
Average Mid 20s $1,552


In your early 20s, you will pay more than $750 more for auto insurance than the rest of your age bracket. Still, there are ways you can save!

Discounts


Aside from your teen years, your 20s will be the most expensive time to insure your car. Young and inexperienced drivers are considered liabilities for insurance companies and thus are charged higher than other drivers. Still, you can compensate these charges in a couple of different ways:


Take a defensive driving course
Lots of places offer defensive driving courses which some insurance companies reciprocate with a discount on your premium. The amount varies so you should speak with your insurance companies for details.


If you’re a student, keep your grades up
If your GPA is above a 3.0 and you’re a student below the age of 25, your insurance company might present you with a Good Student Discount and a reduced premium.


If you rent an apartment, bundle
Bundling your auto and renters policy with the same company can save you an average $72/ year on your auto insurance. Plus, it keeps all your bills without the same company.

Do I need my own policy?


As we stated, there are some gray areas with your car insurance in your 20s. You’re in that time of your life when you have one foot in the world of adulthood and independence, and another foot still at your parent’s house. Well, with car insurance, it’s kinda an all-or-nothing sort of deal.


Together or Separate?

Together
Separate
If you’re away at a college that is over 100 miles away and do not have a car, staying on your parent’s car insurance policy can result in a decreased premium because of a handy little discount. This discount is typically called Distant Student Discount and is applied to the policyholder’s premium (usually your parents). Because you’re living away and driving the car much less frequently, insurance companies don’t see you as prevalent of a risk and thus decrease the premium. If you’re living in a house or apartment outside of your parent’s house and your car is with you, you gotta get your own policy. Your insurance is zip code specific and by living away from where your policy lists you (aka, not your parent’s house), you risk having coverage revoked or a claim denied.


Living with Roommates?

 
It’s pretty common for 20-somethings to have roommates, but it’s not as common for everyone to know exactly how this affects your car insurance. Most insurance companies have ardent stipulations regarding your roommates — they either need to be on your car insurance policy or they need to be excluded entirely. Because you and your roommate share a space and share responsibilities, they see the likelihood of sharing vehicles to be high and thus want to be compensated for that shared risk. So, if you’re living with someone else, either add them to your policy (or you to theirs) and split the bill based on the rated premium (not 50-50) or exclude them. Any customer service agent will be able to breakdown how your premium splits without too much struggle. In terms of excluding someone from your policy, some insurance companies will require you present them with documentation that shows they have outside insurance. Others will just take your word for it.




Late 20s


The big things we are going to discuss for your late 20s are the insurance implications of getting married and buying a house.  Let's take a look.


National Average of Car Insurance for Your Late 20s

Age Group Avg. Annual Premium
27 $1,424
28 $1,444
29 $1,391
Average $1,408

Compared to your age early and mid 20-somethings, you'll see nearly an average savings of $500. Let's explore why.

Getting Hitched


If you’re engaged or even just living with your significant other, consider adding them to your insurance policy for a couple of reasons. One, you will get a decrease in your premium. By updating your marital status from single to married, you can expect a decrease in your car insurance premium by about $74/year. Secondly, it's just easier. As we stated, if they’re not on your policy already you’ll have to exclude them - meaning, anytime they would use your vehicle they would be driving essentially without insurance. This can come back to bite you if you need to switch vehicles or if you’re unable to drive and need their help. Plus, one bill! Easy and simple.


National Average of Car Insurance By Marital Status

Single Married Divorced Widowed
$1,323 $1,249 $1,320 $1,297

Buying a house

Entering the realm of homeownership opens up a lot of doors for the insurance possibilities. Just like getting married, buying a home can decrease your car insurance policy for two reasons. One, if you bundle your home and auto with the same company, you will receive a handy multi-policy discount. Second, insurance companies view homeowners are more financial stable than renters and thus reward that stability with a decreased premium.


National Average of Car Insurance By Homeowner Status

Renter Homeowner Renter with Multi-Policy Homeowner with Multi-Policy
$1,323 $1,292 $1,250 $1,181



Your 20s: Summed up


While you shouldn't spend too much of your 20s concerned about car insurance, the complexities, and dependencies of this time can create some gray areas. Whether or not you need your own policy, if you should share with your roommate, and your ventures into real adulthood all create waves with your insurance company. Still, these changes can be easily navigated with our help. Check our insurance calculator to see how.



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