Your best year to save on car insurance.
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.
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.
If you qualify, USAA will give you the cheapest rate at $1,148 annually, $574 per 6-month, or $96 per month. If you're not a military member or closely related to one, as you need to be in order to qualify for USAA, Geico is only $11 more per month for the same coverage options.
Although you should see some savings simply by turning 25, saving money is always a goood thing. Let's outline some cost-cutting solutions to help you save on your car insurance.
On average, an at-fault accident will raise your rates $687 per year. We say per year because most car insurance companies will include a surcharge to your premium for 3-5 years. Meaning, your total increase for an at-fault accident will range from $2,061 to $3,435.
|Average Annual Premium|
|0 - 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:
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 drastically save you money on car insurance, they can be helpful. Below are some common discounts you should consider.
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's SnapShot||Average of $130|
|Allstate's Drivewise||Average of 10-25%|
|State Farm's Drive Safe & Save||Up to 15%|
|Nationwide's SmartRide||Up to 40%|
|Liberty Mutual's RightTrack||Average of 5-30%|
Root and Metromile are other companies which use alternative pricing models for car insurance. Unlike the companies above, Root only uses the way you drive to determine your premium. Metromile uses a pay-as-you-go model of car insurance but still uses your age, credit score, and zip code.
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