Cheap Car Insurance for 21-Year-Olds

You can order a beer with all the savings from your monthly premiums!

How much is car insurance for 21-year-olds?

On average, a car insurance policy for a 21-year-old driver will cost $1,284 - about $570 more than the national average. Although a 21-year-old is no longer a teen driver, they’re still considered a risky client to an insurance company. Historical data shows they’re more likely to get into car accidents and receive citations. All of which puts an insurance company at more financial risk and thus they’ll charge more in premium.

Still, there are ways to save as a 21-year-old driver. Let’s breakdown some cheap car insurance provider and other ways to save.

How much is car insurance for 21-year-olds:
  1. By company
  2. By Age
  3. By Gender
  4. By Education
  5. By Credit Score
  6. What are some ways to save?




Cheap car insurance for 21-year-olds

Using a methodology outlined here, we discovered that USAA is the cheapest car insurance company for 21-year-old drivers. At $756 for a standard 6-month policy, USAA will set you back $126 per month.

Car Insurance Provider
6-month premium
Allstate
$1,553
Farmers
$1,214
GEICO
$865
Liberty Mutual
$1,866
Nationwide
$941
Progressive
$1,507
State Farm
$1,567
USAA
$756

 

If you’re not a military member or related to one, Geico offers the second cheapest premium at $865. This policy will cost you $18 more per month than USAA. Bear in mind, this data should only be considered as a jumping off point. Your rate can be lower if you’re still on your parent’s policy or if you bundle with renters insurance. Find a quote for your driving profile by entering your zip code below.

 

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Why do 21-year-olds pay more

Although 21-year-olds are paying more than the national average, there’s a considerable drop in premium from 20-year-olds. On average, 21-year-olds pay $328 less per 6-months than 20-year-olds.

Age
6-month premium
20
$1,527
21
$1,199
22
$1,079
23
$998
24
$933
25
$794

 



Your gender and your premium

Until you get to be 25 or so, gender is still a considerable rating factor for car insurance. Insurance companies see young male drivers as statistically riskier than young female drivers and charge accordingly for them. As you age, women actually pay about 1% more for car insurance than men.

Currently, Hawaii, Massachusetts, Montana, and California, are the only states which do not consider gender as a rating factor. Furthermore, effective January 1st, 2019, California, Washington DC, and Oregon require non-binary gender options.

 

How does your education impact your insurance?

While the difference is quite small, car insurance companies see drivers with more education as less likely to get into accidents or file claims. On average, drivers who have a PhD paid $20 less per 6-months than drivers with no education.

Currently, California, Massachusetts, Georgia, and Hawaii do not use your education level in calculating your car insurance quote.

 

Education
6-month premium
None
$752
High School
$743
Bachelors
$735
Masters
$732
PHD
$732




How does your credit score affect your premium?

Having poor credit, which tends to happen with lots of student loans, will cause your car insurance to increase. Data from the Federal Trade Commission shows that drivers with poor levels of credit are not only more likely to file a claim, but their claims tend to be more expensive in value than drivers with higher credit. To an insurance company, this data signals the need for higher premiums in order to protect themselves.

FICO Credit Tier
6-month premium
Very Poor (300-579)
$1,364
Fair (580-669)
$1,120
Good (670-739)
$920
Very Good (740-799)
$768
Exceptional (800-850)
$654

 

Currently, California, Hawaii, and Massachusetts do not use your credit score to determine your premium.



What about your location?

Because insurance is state regulated, any time you move your insurance premium is almost guaranteed to change. Certain zip codes will be rated higher for what an insurance company might see as an additional risk for living there. So, if you live in a state with higher insurance regulations, such as inMichigan, you can expect your premium to be higher.

State

Premium

Louisiana

$8,570

Michigan

$6,820

Texas

$6,054

Delaware

$5,025

Kentucky

$4,795




And your car?

Although turning 21 does allow you to be considered a "mature" driver, you’re still considered risky. So, if you insure a vehicle with a high MSRP (i.e., more expensive to replace if you total it) or a vehicle that is capable of high performance, off-road driving, you can expect your premium to be high. If you’re looking to save money, you should pick a pre-owned moderate sedan or van.

 





How can you save?

After covering the rating factors and explaining why it is expensive to have car insurance as a 21-year old, let’s address the best ways to save.

 

Keep a clean driving record

Although you can get a DUI at any age, now that you can legally drink, you should exceedingly wary of getting a DUI. On average, a DUI will raise your car insurance rate more than $1,000 per year — which doesn’t even begin to cover the myriad of other penalties you will have to pay for. Furthermore, your insurance company will continue to charge you for any violations for a total of 3 years — sometimes longer. InCalifornia, you can be charged for up to 10 years for a DUI.

 

Accident/Violation

Premium Increase

None

 

Speeding 11 - 15 MPH Over Limit

$141

Speeding 16 - 20 MPH Over Limit

$153

Speeding 21 - 25 MPH Over Limit

$165

At-Fault Accident

$306

Reckless Driving

$499

Racing

$523

DUI

$529

 

Good Student Discount

If you’re in college, which many 21-year-olds are, you should consider the Good Student Discount. The age requirements can vary, but most insurance companies still offer this discount to students in your age group. Students with above a 3.0 GPA tend to be more responsible and, in general, be safer drivers. As such, your insurance rewards you with a lower premium. They will usually require proof of your grades every policy period. Combined with a defensive driver discount, you can save an average of $189!

 

Defensive Driver Discount

The logic for this is pretty straight-forward. If you’ve taken a professional driving course, you’re more likely to drive safely. Which, to your insurance company, is good news! Usually, you can take courses provided by your DMV department. But consult your insurance company beforehand to make sure they will honor the discount.

 

Average Savings for Good Student and Good Driver Discount

Age

Male

Female

19

$278

$160

20

$238

$139

21

$202

$117

 

Bundle a renter’s policy

Your renters insurance covers your property and liability in the event something is damaged or you’re found responsible for certain types of damages. Some apartment complexes actually require you to have them, which is a good idea anyway are they’re very useful and usually around $150 per year. So, if you have a renter’s policy, make sure to combined your insurance companies in order to get a multi-policy discount.

 

Renter

Renter with Multi-Policy

$1,323

$1,250




Summary: Car Insurance for 21-year-olds

Turning 21-years-old is notorious for usually one thing and it’s not something usually encouraged by your insurance company. Still, turning 21 has other advantages besides being able to order a beer. You can expect $400 in average annual savings as you begin to appear less risky to your insurance company. But, make sure you keep a clean driving record and especially avoid drinking and driving if you want to keep this low premium. In addition to this, make sure you look for car insurance every 6 months in order to find the best possible rate. Whenever you age, move, or in, general, change anything above your driving profile as discussed above, make sure you check to see you’re getting the best possible rate. 

 


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