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You're getting older, which means more savings on insurance. Discover what you qualify for today.
Becoming 24 is the first step into the semi-daunting milestone of your mid-twenties. While you’re only one year away from the big year of insurance savings, you are still paying an average of $1,921 per year on auto insurance — over twice the national average! Understandably, this makes the need for insurance savings to be quite urgent. Because it may seem like a daunting task, we decided to create the best practices for car insurance at 24 — starting first with how to choose an insurer and what the most important factors are when it comes to calculating your rate.
Cutting right to the key question — which company is the cheapest? — we decided to sample five companies across five zip codes using a profile outlined here. You should consider this data as a starting point — our profile is simply a generic base.
|Insurance Company||Average 6-Month Premium|
Insurance is regulated by the laws of your state and calculated by your zip code, which means it's location dependent. If you live in a state with high insurance regulations, such as Michigan, you can expect your insurance premium to be high regardless of the company you chose. Furthermore, if you live in a zip code that is in a coastal region, you can expect the threat of flooding to cause your premium to be higher.
Sometimes, it’s not your company that determines your rate but rather where you live.
There are many things that affect your car insurance premiums but your credit score is a significant rating factor. Insurance companies see drivers with poor credit (524 or below) as more likely to file a claim than drivers with above an 823 credit score. What’s more, the claims they file are more likely to be costlier than claims filed by drivers with higher scores.
However, some states — California, Hawaii, and Massachusetts — ruled this practice as discriminatory and feel that your driving history with annual mileage is a better indicator of your driving behavior. Just another reason why your location matters!
Similar to your credit score, insurance companies see higher amounts of education as a risk-reducing factor and thus will lower your premiums. Unlike your credit, however, the difference is rather minimal. Drivers with no high school diploma pay only an average of $36 more per year than those with degrees.
If your end goal for shopping for car insurance is to save money, you should think about the impact of a car like a brand new BMW will have on your premium. Vehicles with a high MSRP will result in a higher premium as your insurance company needs to reduce their financial exposure.
Because your rate is dependent on many components to your driving profile that change, you should be continually looking for car insurance every six months. When you celebrate a birthday, change vehicles, or experience another major life event, you should remember to shop for car insurance.
In addition to following our steps above, there are some additional discounts you should think about. Let’s get to it.
This discount is automatically added to your policy when you are quoted using your driver's license number. In addition to receiving a discount for a good driving record, you should try to avoid the premium increases that come from a driving citation or incident listed below.
Average Increase in Annual Premium in 2018
|Speeding 11 - 15 MPH Over Limit||$308|
|Speeding 16 - 20 MPH Over Limit||$342|
|Speeding 21 - 25 MPH Over Limit||$381|
Getting a renters insurance policy with the same company can save you money! Renters insurance policies cost around $150 a year and cover your liability and your belongings in the event you are found liable for damages or your belongings are destroyed. Find more information on renters insurance here and learn more about discounts for bundling auto and renters insurance here.
Annual Savings in 2018
|Renter||Renter with Multi-Policy|
Drivers who are under 25 are eligible for these discounts as long they have proof. In order to qualify for the good student discount, you must have a GPA above a 3.0 (or B average). For the latter, you need to have taken a pre-approved course and provide proof to your insurer that you have taken the course. While the amount of these discounts decrease as you age, you can see an average savings of $107 per year!
While turning 24 means you’re making headway into your mid-twenties, you still pay quite a bit more than others in the same age bracket. Starting your search with Progressive and State Farm are great ways to get the ball rolling — but be sure to pay attention to your financial health, location, and driving history. Shopping around every six months is one of the best ways to ensure you're getting the best rate.
We randomly selected 5 zip codes in 5 different areas across the US by using the 5 most popular companies in the US based on net premiums written. Here are the zip codes we selected:
With that created, we created our user profile: a 24-year-old male driver. This is the information we chose to use: