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?

The most iconic part of turning 21-years-old is obviously the age you can (legally) drink alcohol. But from an insurance perspective, turning 21-years-old means even more insurance savings. You now have several years of what is hopefully a positive driving record and insurance experience which is reflected in your lowered premium. And just how much is your newly lowered premium? An average of nearly 400 bucks per year in savings! 

Despite this, there are still some important things to keep in mind when you’re looking for car insurance at 21. Let’s break it down by how your insurance company rates you as a client.

  1. By Age
  2. By Gender
  3. By Education
  4. By Credit Score
  5. By Location
  6. By Vehicle
  7. What are some ways to save?
  8. Car Insurance for 21-year-olds: Summed Up

How your age affects your premium

Average Premium on Family Plan
Now that you've escaped your teenage years, you'll start to see some savings. This has to do with the way your insurance company sees you. You now have another year of driving experience, insurance experience (if you were previously insured before this), education, and credit history — all of which makes you a better client to an insurance company. As a general rule of thumb, anytime you have a birthday, you should shop around for car insurance for exactly this reason.

Age Premium
20 $1,906
21 $1,720
22 $1,643

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. On average, 21-year-old males pay $308 more per year than female drivers.

The data below puts a 21-year-old driver on their parent’s 6 month policy. So if you’re alone, you might expect this data to be considerably different.

Age Male Female Difference
20 $1,992 $1,797 $173
21 $1,797 $1,643 $154
22 $1,701 $1,584 $117

How does your education impact your insurance?

Overall, the more education you receive, the lower your premium will be. Fair or not, historical insurance data shows that drivers with more education are less likely to file a claim than those with less. So, if you're pursuing higher education, take comfort in the fact you will not only be rewarded with a degree, but some insurance savings as well.

Avg Annual Premium in 2016 Based on Education

None High-School Bachelors Masters PhD
$1,355 $1,342 $1,323 $1,320 $1,319

How does your credit score affect your premium?

Having poor credit, which tends to happen with lots of student loans, you can expect to pay more for auto insurance. Unfortunately, drivers with poor credit pay more than twice for car insurance than those with excellent credit. This is because the Federal Trade Commission shows that driver with low credit are not only more likely to file a claim, but claims with higher dollar amounts than those with better credit. To an insurance company, this data signals the need for higher premiums in order to protect themselves.

So, if you have student loans, make plans to ensure your credit doesn't suffer as a result. Improving your credit score from Poor to Excellent can decrease your premium by 53%, or about $1,281 per year!

Poor Below Fair Fair Good Excellent
$2,411 $1,934 $1,571 $1,323 $1,130

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 in Michigan, you can expect your premium to be higher.

Annual Premium for the Most Expensive States

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 considerably 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. In California, you can be charged for up to 10 years for a DUI.

Accident/Violation Premium Increase
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 safety. Which, to your insurance company, is good news! Usually, you can take courses provided by your DMV department. But consult with 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. Do that here with us.

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