25 could be your best year for car insurance savings.
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 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.
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.
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.
|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 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 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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