Cheap Car Insurance for Recent Graduates

You're officially out in the world — and now responsible for a lot more

What is cheap car insurance for recent grads?


College is synonymous with ramen noodles, IKEA-filled apartments, and, in general, not having lots of extra cash. And, for a lot of people, the time after you graduate can be quite similar to this. You're struggling to get a foothold in any career and the world, overall. The last thing you think about is car insurance. Still, because the changes you go through as well as the need for financial security, it's important to consider the importance of making sure you're not paying too much for auto insurance. Let's explore cheap car insurance after you graduate.



In this article, we will discuss:


  1. How much do recent grads pay?
  2. What's the cheapest company for you?
  3. What to do with your car when moving out of state?
  4. What about living with your roommates?
  5. Explore more




How much do recent grads pay?


Annual Premiums in 2016
While you can technically be a recent college graduate at any age, we're going to use the more common age range of 22-25. On average, recent grads pay $1,696 per year for car insurance or $848 per a typical 6-month policy. That’s about $400 more than the national average. As we stated, this is because of the level of concern insurance companies have with young and less-experienced drivers. And any time an insurance company has a risk, they will cushion themselves with additional premium. But don’t worry, we've got some options to cushion YOUR monthly premium!
Age Group Avg. Annual Premium
22 $2,023
23 $1,869
24 $1,757
25 $1,462
Average $1,696




Discounts & Ways to Save


In order to discover how to really save as a recent graduate, we decided to conduct an case study across 5 different companies across 5 zip codes in the US using a base profile discussed here. Here are our results.


Car Insurance Premiums for 25-year-olds

Location State Farm All State Geico Progressive Liberty Mutual
Scranton, PA $1,402 $987 $578 $574 $1,584
Columbus, OH $1,087 $1,847 $913 $973 $2,190
Fresno, CA $1,608 $775 $813 $994 $2,136
Aurora, CO $1,690 $1,368 $1,194 $966 $2,130
McKinney, TX $1,260 $1,847 $913 $973 $2,190
Average $1,409 $1,279 $875 $855 $1,865

As you can see, with the profile we created, Progressive offers the cheapest premium for 25-year-old, college-educated students. You should consider, however, that our base profile won't be an exact match for you. Every company responds to your unique needs differently and thus prices them accordingly. Meaning, you should consider our data and results as a reference point when looking for car insurance and explore as many companies as possible.

Because of this, we've outlined some other ways to save on auto insurance that are not company specific.



Multi-Policy Discounts

Consider bundling your renters or homeowners with your auto insurance on the same company. This will not only make payments easier, but give you a little discount.


Average Annual Savings in 2016

Renters Savings Homeowner Savings
$73 $142


Educational Discounts

Insurance companies are constantly looking for different attributes that are correlated to risk reduction tendencies. Meaning, things about you that make you seem like a safe and responsible driver. As it relates to your post-grad life, insurance companies actually see driver with more education as more responsible when they drive. Because of this, you'll find that having more education can save you on auto insurance.


Avg Annual Premium in 2016 Based on Education

None High-School Bachelors Masters PhD
$1,355 $1,342 $1,323 $1,320 $1,319


Pick the right payment plan

If you can, consider how your payment plan can save you on auto insurance. Insurance companies like getting their money upfront and will often reduce the total amount owed if you pay it immediately. On average, paying your premium up front (otherwise known as "paid in full") can save you $61 per year!

If you're unable to do this, you should consider making your installment payments via Electronic Funds Tranfer. This refers to payments directly from your bank account. Companies will offer a discount for this because it helps alleviate processing fees.


Average Rates by Electronic Funds Transfer

Yes No Savings
$1,295 $1,322 $27

Average Rates by Payment Plans

Paid In Full Installments Savings
$1,261 $1,323 $61


Consider telematics

While being a relatively new branch of the insurance industry, telematics are in-car or in-phone devices that track the way you drive in order to get a more comprehensive look at your driving profile. Using telematics, insurance companies can get a more accurate look at your driving ability in order to accurately price your premium. Here are some companies and the corresponding potential savings.


Company Estimated Savings
Progressive's SnapShot Average of $130
Allstate's Drivewise Average of 10-25%
State Farm's Drive Safe & Save Up to 15%
Esurance's DriveSense Varies
Nationwide's SmartRide Up to 40%
Liberty Mutual's RightTrack Average of 5-30%

You should consider that not all states participate in the above programs. Check with your company to see if you're eligible.



Changing your coverage

If you have an older vehicle, you might consider if having collision or comprehensive coverage is worth it. Unlike liability insurance, these coverages are only required if you’re leasing your vehicle or have a bank/dealership financing it. If your car is bought and paid for and the value of the vehicle isn't significant, you might benefit by reducing coverage. Bear in mind, however, that by doing this you put yourself at risk if you're in an at-fault accident as comprehensive and collision protect your car. So, if you still want coverage for your vehicle in the event of an accident, keep comprehensive and collision.





Relocating?


A big factor to consider after you graduate is the idea of relocation. Whether that means returning to your hometown or getting a job elsewhere, moving can have big impacts on your driving life for a couple of reasons. Let's explore.


Insurance

Insurance is state-regulated and zip code specific — meaning every state has their own ways of handling things. So, if you’re moving from one state to another, you need to get a policy that is written for the state and rated for the zip code you would be moving to.


Registration and Drivers License

When you move to another state, you need to make sure you update your driver's license and your vehicle's registration information. In order to update your driver's license, you will need the following information:

  1. Identification: Your current license and additional forms of identification such your social security card
  2. Proof of residence at your new address: usually two forms, such as a utilities or some kind of bill
  3. Money! Gotta pay for it.

Your vehicle is registered with your state DMV department so you will need update it prior to moving. Be aware, you generally must register your car in your new state within a certain period of time. Usually, the process is pretty straight forward. You will need the following ready:

  1. Your identification and vehicle information: Your drivers license and VIN
  2. Proof of ownership: lien statement or title
  3. Odometer disclosure statement: this requirement varies by state
  4. Emissions disclosure statement: this requirement varies by state
  5. Bill of sale: this requirement varies by state


After this, you will need to prove you have insurance, get the vehicle inspected, then complete the registration form. Some DMVs allow you to do this online; others require you to go the DMV in person. Then you will receive your new license plates for your new state!





Car insurance + Roomies


Once you graduate from college, it’s very likely you will have a roommate or two — it's cheaper than living alone and, depending on the roommate, it can be fun. Your insurance company understands living with other people, but they do have some concerns that can can complicate your relationship with your insurance company. As you and your roommate are sharing a space, they worry you will also be sharing vehicles. And, unless they’re on your policy, your insurance company isn’t charging your premium for that additional driver. Follow our handy guide to navigate the waters of insurance companies and roommates!


Should you share a car insurance policy with your roommate?

Together
Separate
Having your roommate and their vehicle on one policy can give you a multi-vehicle discount. Plus, you can speak with your agent or a customer service representative to have your bill evenly split by how much your company rates you as a driver (rather than just 50/50). If your roommate has a bad driving record, a bad credit score, or drives a fancy car, your premium can be impacted negatively as your insurance sees these things as risky. A bad driving record and credit score equate to a higher possibility for claims for an insurance company. Plus, a fancy car is harder to replace if anything happens to it.




Summary


After you graduate, it can be difficult to tie up all the moving pieces of your new life. With trying to find a job and figure out this whole "adult" thing, the very last thing you want to to deal with is car insurance. Rest assured, however, that by starting your search (but not ending it) with Progressive, looking for extra discounts, and making sure your car insurance and registration match your location, you can avoid some potential issues. But, of course, the absolute best way to make sure you're getting the best possible rates on car insurance is to shop around every 6 months. Only with The Zebra can shop over 200 companies at once in order to find the one that will you give you the rate you need.




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Want more information on how to save?


If you're looking for more specifics regarding ways to save on car insurance, see our additional articles here





Methodology


We randomly selected 5 zip codes in 5 different areas across the US by using the 5 most popular companies in the US based on net premiums written. Here are the zip codes we selected:


  • Columbus, OH - 43216
  • McKinney, TX - 75070
  • Fresno, CA - 75070
  • Scranton, PA - 93722
  • Aurora, CO - 80013


Next, we needed to create the profile of the 25-year-old driver. Here is the information:


  • DOB: 08/01/1992
  • Vehicle: 2015 Toyota Carmy, owned, 12,000/year
  • Driving Record: no accidents or citation
  • Education: BA
  • Licensed at: 17
  • Occupation: Marketing Representative