Cheap Car Insurance for 25-Year-Olds

Paying too much for auto insurance as a 25-year-old driver? Check out our tips on how to save.

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Best car insurance for 25-year-olds

The average car insurance rate for a 25-year-old driver is $1,587 per year — or about $960 for a standard six-month policy. While 25-year-old drivers do pay more than the national average, their premiums decrease by nearly $300 per year just by virtue of turning 25 and no longer being designated as "young drivers." Since saving money on car insurance is important at any age, let’s explore some ways to save on car insurance premiums at the age of 25.

 

Table of contents:

  1. Average car insurance costs for 25-year-olds
  2. How to save on auto insurance
  3. Additional resources

 

What is the cheapest car insurance company for a 25-year-old driver?

In order to find the cheapest car insurance policy, we created a user profile (outlined here) and gathered premiums from some of America's most popular companies. Based on our research, USAA and GEICO provided the most affordable auto insurance rates for 25-year-olds.

 

Insurance Provider
Average Annual Premium
Allstate$2,231
Farmers$1,743
GEICO$1,278
Liberty Mutual$1,966
Nationwide$1,316
Progressive$1,826
State Farm$1,919
USAA$1,148

 

USAA offers the cheapest rates at $1,148 annually, $574 per six-month term, or $96 per month for a 25-year-old driver. Those ineligible for USAA's armed forces-focused coverage should consider GEICO, which charges just $11 more per month for similar coverage. 

 

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How to save on car insurance at age 25

Although you should see some savings simply by turning 25, you can save even more by being prudent with your coverage and claims. Below are some cost-cutting solutions to help you save on car insurance.

 

Pay for claims out of pocket, if possible 

On average, an at-fault accident will raise your rates by $687 per year. Most car insurance companies will add this surcharge to your premium for three to five years. Your total increase after an at-fault accident could range from $2,061 to $3,435.

 

Years After Accident
Average Annual Premium
No Accident$1,427
1 Year Later$2,114
2 Years Later$2,801
3 Years Later$3,488

 

If you're unsure of whether or not to file a claim after an accident, follow these steps:

  • Get an estimate for the repairs.
  • Use our State of Insurance analysis to see how much an at-fault accident would raise your rate in your state. Again, consider this value over three to five years.
  • Compare the out-of-pocket expenses to the rate increase you would receive plus your deductible (you would have to pay your deductible prior to having any claim payout). If it is cheaper to pay for the damage out of pocket, do that.

 

Pay only for the coverage you need

If you're driving a vehicle you have had since high school, chances are the vehicle isn't worth much. The general rule of thumb in the insurance world is if the vehicle is worth less than $4,000 and you own it, you should drop collision and comprehensive coverage. While not required by law, comprehensive and collision coverage provide physical protection to your vehicle. However, because these coverages tend to be fairly expensive if your vehicle isn't worth much you might be paying for coverage you do not need. Find out the value of your vehicle by using sites like Kelley Blue Book and NADA online.

 

Find discounts

While discounts aren't going to cut your car insurance rates to zero, they can help ease the cost burden. Below are common discounts worth considering:

 

Consider telematics and usage-based insurance programs

Telematics is a relatively new but growing part of the car insurance industry. Basically, car insurance companies use in-vehicle devices to monitor the way you drive to determine your premium. Currently, your car insurance premium is calculated based on factors related and unrelated to the way you drive. Things like your education level, gender, and credit score are widely used by car insurance companies to determine your rate but are not reflective of the way you drive.

By using your speed, time of day often driven, your braking and accelerating behaviors to rate your premium, telematics are more reflective on who you actually are as a driver. Below are some estimated savings you can expect from popular insurance companies.

 

Program 
Average Savings
Progressive SnapShotAverage of $130
Allstate DrivewiseAverage of 10-25%
State Farm Drive Safe & SaveUp to 15%
Esurance DriveSenseVaries
Nationwide SmartRideUp to 40%
Liberty Mutual RightTrackAverage of 5-30%

 

Root and Metromile also use alternative pricing models for car insurance. Unlike the companies above, Root uses only the way you drive to determine your premium. Metromile's pay-as-you-go model uses your age, credit score, and ZIP code. 

 

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Additional resources

If you're looking for additional content regarding how to save money on car insurance, see our articles:

 


 

This article was written by one of The Zebra’s resident insurance experts. Each article is thoroughly researched to ensure we provide readers the most accurate — and helpful! — information possible. That’s insurance in black and white.®


Recent Questions:

Cheap Car Insurance for 25-Year-Olds

Should both my girlfriend and I be on the car title?

I would only put the title in one name — whoever will own and register the vehicle. Putting two people on the title may only complicate things unnecessarily and make it harder to sell.

Should my daughter have her own insurance policy?

It would make the most sense for her to have her own policy since she will be traveling, and potentially living, in multiple states after no longer being considered a student. Her "home address", as far as an insurance company is concerned, is where she keeps the vehicle for at least 6 months out of the year.

Should I drop my 25yo son from insurance?

To answer your first question, will removing your son from the policy help decrease your premium, it depends. Some companies are going to charge you because the claim was made on your policy so your rates can still be impacted at renewal, even if you take your son off the policy.

How do I get points on my license in CA?

To answer your first question, I wouldn't file a claim. Being the deductible is only a few hundred dollars, you would pay more in a rate increase after filing a claim than you would receive.