Cheap Car Insurance for Recent Graduates

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

Best car insurance for recent grads

On average, drivers younger than 25 pay more for car insurance than do drivers in any other age bracket. While there isn’t a set age for recent grads, many do fall in within 21-to-25 cohort. Let’s explore the cheapest car insurance companies for recent graduates and review some helpful policy information worth being aware of.

  1. What's the cheapest insurance company for recent grads?
  2. How to save
  3. What to do with your car when moving out of state?
  4. Car insurance for roommates
  5. Related content

 

Car insurance for college grads

According to The Zebra's insurance rating methodology, USAA is the cheapest car insurance provider for drivers between the ages of 22-25. At $655 for a standard six-month policy,USAAis $404 cheaper than the group average.

Insurers

6-Month Premium

Allstate

$1,365

Farmers

$1,038

GEICO

$747

Liberty Mutual

$1,396

Nationwide

$813

Progressive

$1,181

State Farm

$1,276

USAA

$655

 

If you’re not a military member — or related to one — consider GEICO. At $747, GEICO's average rate is $312 cheaper than the group average. Although this isn’t representative of every recent graduate driver, you can enter your ZIP code below to find personalized rates.

 

See the best car insurance rates for recent grads!

 

Other ways to save on car insurance

Although shopping around and comparing rates from different insurance providers is the best way to find cheap car insurance, there are other solutions worth keeping in mind.

 

Look into telematics programs

Telematics are in-car devices which monitor the way you drive in order to more accurately determine your premium. With traditional auto insurance, non-driving related characteristics are used to determine your rates. With telematics, your premium will be determined by driving habits, including:

  • Braking
  • Acceleration speed
  • Time of day driven
  • Overall speeds

Below are some common discounts you could expect from popular providers in the US.

Insurer

Estimated Savings

Progressive SnapShot

Average of $130

Allstate Drivewise

Average of 10-25%

State Farm Drive Safe & Save

Up to 15%

Esurance DriveSense

Varies

Nationwide SmartRide

Up to 40%

Liberty Mutual RightTrack

Average of 5-30%

Root Insurance

Varies

Metromile

Varies

 

Bundle your renters or homeowners policies with your auto insurance

Consider bundling renters or homeowners policy with your auto insurance on the same company. This will simplify the payment process and potentially provide a discount. On average, you can save $56 by bundling your home and auto policies.

bundle status

For more information regarding bundling, see our additional content:

 

Educational discounts

Insurance companies use personal attributes correlated with risky driving tendencies. As it relates to your post-grad life, insurance companies actually see a driver with more education as more responsible. This is why greater educational attainment may lead to lower auto insurance rates.

Education Level

6-Month Premium

None

$752

High School

$743

Bachelors

$735

Masters

$732

PhD

$732



Be careful with your credit

Your credit score is another non-driving rating factor used by car insurance providers to price your premium. On average, a driver with very poor credit (300-579) will pay $710 more per policy period for auto insurance. If you have student loans after you graduate, be sure to keep up with them to avoid any increases to your premium.

FICO Credit Tier6-Month Premium
Very Poor (300-579)$1,364
Fair (580-669)$1,120
Good (670-739)$920
Very Good (740-799)$769
Exceptional (800-850)$654


Learn more about how credit score impacts auto insurance rates.

Be smart with your insurance coverage

If you have an older vehicle, consider whether having collision or comprehensive coverage is worth it. Unlike liability insurance, these coverages are only required if you’releasingyour vehicle or have aloanon the vehicle. If your car is bought and paid for and the value of the vehicle greater than $4,000, you might benefit from reducing coverage. While the cost of coverage options will depend, they can account for half of your monthly payments.

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 full coverage for your vehicle in the event of an accident, keep comprehensive and collision.

You can determine the value of your vehicle via Kelley Blue Book and NADA online. If your vehicle is worth more than $4,000, consider raising your deductible. Because your premium and deductible are inversely related, a high deductible will lower your monthly payments.

 


 

Car insurance when moving out of state

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 by state

Insurance is state-regulated and zip code specific — meaning every state has its own laws regarding their insurance coverage. 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 driver’s license regulations

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 as your social security card
  2. Proof of residence at your new address:Usually two forms, such as utilities or some kind of bill
  3. Money:There will be associated fees with this process.

 

Your vehicle is registered with your state DMV department so you will need to 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 driver’s 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.

 

Can you stay on your parent’s insurance plan?

Unlike health insurance, you cannot age out of an insurance policy. However, leaving your parent’s address and taking a car with you can make you ineligible. Because car insurance is zip code specific, your policy needs to priced for the garaging address the vehicle is the majority of the time.

If you get a job in another city and move, you will need an insurance plan for your new residence. Bear in mind, your parent’s can still pay for it - an insurance company doesn’t care who pays the bills.

 


 

Car insurance and roommates

Once you graduate from college, it’s 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 complicate your relationship with your insurance company.

As you and your roommate are sharing a space, your insurance company worries that you will share vehicles. Unless you share a policy with your roommate, your insurance company isn’t pricing your premium to cover an additional driver.

 

Can I add my roommate to my car insurance?

If you and your roommate will be sharing vehicles, you should add them to your policy. This will not only ensure any damage they cause to your vehicle or others is covered, but it can come with a multiple-driver discount. This will cause your premium to increase — especially if your roommate has bad credit or a poor driving record.

 

Should I keep my car insurance policy separate?

If your roommate does not use your vehicle, there’s no reason for them to be added to your policy. Your insurance company might require they be excluded from your policy because they’re living at your address. An insurance company will request you to exclude a driver if they’re worried they could potentially be using the vehicle without being a chargeable driver. In the event the excluded driver causes damage, they could refuse to provide coverage.

 


 

Summary: car insurance after graduation

The important takeaways for car insurance after you graduate is to shop for a new plan every six months. If you’re a young driver, each birthday will lower your insurance premium by hundreds of dollars. Enter your ZIP code to start comparing rates today.



Find affordable insurance today!


Recent Questions:

Cheap Car Insurance for Recent Graduates

How should I handle my daughters’ car insurance when they’re in college?

Jan 19, 2019
Tullahoma, TN

Our daughters are still shown as living with us even though they are in college and the vehicles are with ...

Should I register my vehicle in the state I attend college in?

Sep 25, 2018
Tampa, FL

Should a college student who has a residency in a different state register his car to the state he goes ...

Would moving 19 year old child who is in college onto her own policy a smart move?

Aug 19, 2018
Watkinsville, GA

My husband and I are considering moving our 19 year old daughter onto her own policy. She is a responsible ...

Can my parent’s be sued if I don’t have enough coverage after an accident?

Feb 22, 2018
Santa Rose, California

I am 24 year old. I live at home, I’m a student, owns her car/pays for car insurance, no assets. ...

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