Paying too much for auto insurance as a 25-year-old driver? Check out our tips on how to save.
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. Since saving money on car insurance is important at any age, let’s explore some ways to save on car insurance premiums at 25.
In order to find the cheapest car insurance policy, we created a user profile (outlined here) and fetched premium estimates from some of America's most popular companies. USAA and GEICO provide the most affordable auto insurance rates for 25-year-olds.
USAA offers the cheapest rates at $1,148 annually, $574 per six-month term, or $96 per month. Those ineligible for USAA's armed forces-focused coverage should consider GEICO, which charges just $11 more per month for similar coverage.
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.
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.
|Average Annual Premium|
|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:
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.
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:
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.
|Progressive SnapShot||Average of $130|
|Allstate Drivewise||Average of 10-25%|
|State Farm Drive Safe & Save||Up to 15%|
|Nationwide SmartRide||Up to 40%|
|Liberty Mutual RightTrack||Average 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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