Cheap Car Insurance for 25-Year-Olds

25 could be your best year for car insurance savings.


Best car insurance for 25-year-olds

On average, a 25-year-old pays $1,587 per year for car insurance - about $960 for a standard 6-month policy. While you’re still paying slightly more than the rest of the US, your premium decreases by nearly $300 simply by turning 25. Still, saving money on car insurance is important at any age. Let’s explore some ways to save on car insurance at 25.

 

Car insurance for 25-year-old drivers

  1. Average cost
  2. How to save
  3. Additional resources

 

What's the cheapest car insurance company for a 25-year-old?

In order to find the cheapest car insurance policy, we created a user profile (outlined here) and got estimates for top companies across the US. Looking at the data below, you can see that USAA and Geico will provide you with the cheapest rates.

 

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

 

If you qualify, USAA offers the cheapest rate ($1,148 annually, $574 per six-month term, or $96 per month). If you're not eligible for USAA's coverage, GEICO charges just $11 more per month for similar coverage. 

 

Ready to find your own rates?

 

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. Let's outline some cost-cutting solutions to help you save on your car insurance.

 

Pay for claims out of pocket, if possible 

On average, an at-fault accident will raise your rates $687 per year. Most car insurance companies will add this surcharge to your premium for 3 to 5 years. Your total increase after an at-fault accident may range from $2,061 to $3,435.

 

Year 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 our 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 3 to 5 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.

 

Only pay for 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.

 

Rank up your discounts

While discounts aren't going to drastically save you money on car insurance, they can be helpful. Below are some common discounts you should consider.

 

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. 

 

 

 

Compare over 200 insurance companies at once!

 

 

Additional resources

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

Average cost of car insurance in 2018

Best car insurance for students

Car insurance for recent grads

Cheapest car insurance for a financed vehicle


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