For young drivers, the cost of car insurance can feel like a heavy burden. It’s a common question swirling around as birthdays pass: Does Insurance Go Down At 25? Many hope turning 25 marks a turning point, leading to more affordable premiums. According to Bankrate’s analysis of average insurance costs, the answer is potentially yes. The average annual car insurance cost for a 25-year-old with full coverage is around $2,176, and for minimum coverage, it’s about $654.
However, it’s crucial to understand that even at 25, car insurance isn’t as cheap as it is for older, more seasoned drivers. Insurance rates are deeply personal and influenced by numerous factors. So, while there’s a general trend, should you automatically expect your rates to plummet at 25? And if so, by how much? Let’s delve into what you need to know about car insurance and age 25.
Will Your Car Insurance Rates Decrease at 25?
Generally, data suggests that car insurance rates for 25-year-olds are indeed lower than those for younger drivers. This is supported by rate averages compiled by Quadrant Information Services across various age groups.
According to Robert Passmore, Vice President of Personal Lines Policies at the American Property Casualty Insurance Association, this trend is well-recognized in the insurance industry. “Generally, once you turn 25, your rates are going to be a little better,” Passmore notes. He further explains that reaching the age of 30 often brings another dip in premiums, assuming a continued clean driving record. Insurers perceive drivers in their late twenties and thirties as more mature and less risky.
Examining average rates from major car insurance companies reinforces this pattern. The table below compares the average full coverage premiums for 25-year-olds against those for 24-year-olds and 18-year-olds, illustrating the potential savings as drivers age out of the highest-risk brackets.
| COMPANY | AVERAGE ANNUAL 25-YEAR-OLD FULL COVERAGE PREMIUM | % DECREASE FROM 24-YEAR-OLD PREMIUMS | % DECREASE FROM 18-YEAR-OLD PREMIUMS |
|---|---|---|---|
| State Farm | $1,637 | -12% | -34% |
| Geico | $1,521 | -10% | -37% |
| Progressive | $1,940 | -11% | -35% |
| Allstate | $2,941 | -18% | -24% |
| Travelers | $1,657 | -14% | -39% |
| Chubb | $2,995 | -14% | -20% |
| USAA | $1,585 | -7% | -23% |
| Farmers | $1,719 | -13% | -33% |
| Nationwide | $1,621 | -14% | -14% |
Rates are based on a 25-year-old renter on their own policy, a 24-year-old renter on their own policy, and an 18-year-old on their parent’s policy.
State-by-State Car Insurance Rate Reductions for 25-Year-Olds
The decrease in car insurance costs at 25 isn’t uniform across the United States. The extent of savings can vary significantly depending on your state of residence. Bankrate’s study of average rates across the country reveals that young adult drivers can generally anticipate noticeable reductions in their auto insurance premiums upon reaching age 25.
Interestingly, certain states offer more substantial percentage drops in average premiums between the ages of 24 and 25. The top five states with the largest percentage reductions are:
- Montana: -22%
- Vermont: -21%
- Wyoming: -20%
- Pennsylvania: -19%
- Michigan: -19%
For a more detailed look, the table below presents a state-by-state comparison of average annual full coverage premiums for 25-year-olds and 24-year-olds, highlighting the dollar difference in cost.
| STATE | AVERAGE ANNUAL FULL COVERAGE PREMIUM FOR A 25-YEAR-OLD | AVERAGE ANNUAL FULL COVERAGE PREMIUM FOR AN 24-YEAR-OLD | DOLLAR DIFFERENCE |
|---|---|---|---|
| Alabama | $2,189 | $2,624 | -$435 |
| Alaska | $2,143 | $2,549 | -$406 |
| Arizona | $2,119 | $2,494 | -$375 |
| Arkansas | $2,309 | $2,560 | -$251 |
| California | $2,750 | $2,948 | -$198 |
| Colorado | $2,469 | $2,916 | -$447 |
| Connecticut | $1,975 | $2,279 | -$304 |
| Delaware | $2,362 | $2,816 | -$454 |
| Florida | $3,468 | $3,915 | -$447 |
| Georgia | $2,542 | $2,875 | -$333 |
| Hawaii | $1,265 | $1,265 | $0 |
| Idaho | $1,347 | $1,602 | -$255 |
| Illinois | $1,941 | $2,329 | -$388 |
| Indiana | $1,538 | $1,830 | -$292 |
| Iowa | $1,530 | $1,799 | -$269 |
| Kansas | $2,226 | $2,621 | -$395 |
| Kentucky | $2,483 | $2,974 | -$491 |
| Louisiana | $3,524 | $4,064 | -$540 |
| Maine | $1,149 | $1,384 | -$235 |
| Maryland | $2,385 | $2,750 | -$365 |
| Massachusetts | $1,480 | $1,480 | $0 |
| Michigan | $2,707 | $3,330 | -$623 |
| Minnesota | $2,061 | $2,380 | -$319 |
| Mississippi | $2,148 | $2,426 | -$278 |
| Missouri | $2,355 | $2,838 | -$483 |
| Montana | $2,057 | $2,638 | -$581 |
| Nebraska | $1,867 | $2,229 | -$362 |
| Nevada | $2,981 | $3,453 | -$472 |
| New Hampshire | $1,553 | $1,823 | -$270 |
| New Jersey | $2,322 | $2,694 | -$372 |
| New Mexico | $1,849 | $2,112 | -$263 |
| New York | $3,509 | $3,966 | -$457 |
| North Carolina | $1,471 | $1,499 | -$28 |
| North Dakota | $1,483 | $1,668 | -$185 |
| Ohio | $1,543 | $1,792 | -$249 |
| Oklahoma | $2,313 | $2,635 | -$322 |
| Oregon | $1,678 | $1,932 | -$254 |
| Pennsylvania | $2,381 | $2,943 | -$562 |
| Rhode Island | $2,253 | $2,624 | -$371 |
| South Carolina | $1,840 | $2,126 | -$286 |
| South Dakota | $1,812 | $2,066 | -$254 |
| Tennessee | $1,799 | $2,040 | -$241 |
| Texas | $2,270 | $2,664 | -$394 |
| Utah | $1,771 | $2,108 | -$337 |
| Vermont | $1,241 | $1,563 | -$322 |
| Virginia | $1,756 | $2,085 | -$329 |
| Washington | $1,688 | $1,961 | -$273 |
| Washington, D.C. | $2,345 | $2,675 | -$331 |
| West Virginia | $1,856 | $2,157 | -$301 |
| Wisconsin | $1,556 | $1,795 | -$239 |
| Wyoming | $1,774 | $2,206 | -$432 |
Rates are based on a 25-year-old renter on their own policy and a 24-year-old renter on their own policy.
Important Note: Age is not a factor in determining car insurance rates in Hawaii and Massachusetts due to state regulations. This explains the $0 difference in those states.
The Role of Gender in Car Insurance Premiums at 25
Beyond age, gender is another factor that insurance companies often consider when setting car insurance rates. Although some states prohibit gender as a rating factor, statistically, there are observable differences in driving behavior between genders. Data indicates that female drivers generally have fewer driving incidents than male drivers, including fewer DUIs and less severe accidents. This perceived lower risk often translates to lower average premiums for 25-year-old women compared to their male counterparts.
| AVERAGE ANNUAL FULL COVERAGE PREMIUM |
|---|
| 25-year-old male |
| 25-year-old female |
Strategies to Save on Car Insurance as a 25-Year-Old Driver
While younger drivers often benefit from staying on a family policy, this option may not be feasible for 25-year-olds, especially if they’ve moved out. If you’re a 25-year-old seeking more affordable car insurance, there are proactive steps you can take. Consulting with a licensed insurance agent is a great starting point to explore the best coverage options for your specific needs and identify potential discounts. Always inquire about car insurance discounts specifically for 25-year-olds as you transition to your own policy.
Maintaining a clean driving record from a young age (16-24) significantly increases your chances of securing better rates at 25. Amy Bach, Executive Director of the consumer advocacy group United Policyholders, emphasizes the importance of proactive communication with your insurer. “You always should ask,” Bach advises. “Do not wait to be offered a discount or a rate reduction.” Upon turning 25, make it a point to request a policy review from your insurance provider.
Why Your Insurance Rates Might Not Decrease at 25
Despite the general trend of decreasing rates, some 25-year-olds may not experience the anticipated savings. Several factors could explain this, and the most precise explanation will come from your insurance agent. Here are a few common reasons why your rates might not have gone down as expected:
- State Regulations: As previously noted, some states, like Hawaii and Massachusetts, do not allow age to be used as a factor in determining car insurance premiums. If you reside in such a state, age 25 will not automatically trigger a rate reduction.
- Driving Record Issues: Traffic violations, even seemingly minor ones like speeding tickets, or at-fault accidents can negatively impact your insurance rates. These incidents can lead to surcharges and negate any potential “good driver” discounts you might have earned.
- Recent Licensure: Insurers consider driving experience. Someone licensed at 16 has nearly a decade of experience by 25, while a driver who got their license in their early 20s has less experience. Less driving history can sometimes translate to higher premiums, even at age 25.
Other Elements Influencing Your Car Insurance Premiums
While age is a significant determinant, it’s just one piece of the car insurance rate puzzle. Numerous other factors contribute to your final premium. These include:
- Driving Record: Accidents, tickets, and violations.
- Vehicle Type: The make, model, and year of your car.
- Coverage Levels: The types and limits of coverage you choose (liability, collision, comprehensive, etc.).
- Location: Your city and state, as rates vary geographically.
- Credit Score: In many states, insurers use credit scores as an indicator of risk.
- Marital Status: Married drivers statistically file fewer claims.
- Annual Mileage: How much you drive annually.
Each insurance company weighs these elements differently. This is why comparing quotes from multiple insurers is crucial to finding the most competitive rates. Taking control of factors within your reach, such as safe driving, maintaining good credit (where applicable), and carefully selecting your coverage, can significantly impact your ability to secure affordable car insurance.
Methodology
Bankrate’s analysis uses data from Quadrant Information Services, encompassing rates for all ZIP codes and carriers across all 50 states and Washington, D.C. Rates are weighted based on population density. Quoted rates are based on 25-year-old male and female drivers with a clean driving record, good credit, and full coverage limits of: $100,000/$300,000 Bodily Injury Liability, $50,000 Property Damage Liability, $100,000/$300,000 Uninsured Motorist Bodily Injury, and $500 deductibles for both collision and comprehensive coverage. Minimum coverage rates reflect state-mandated minimums. Sample drivers own a 2020 Toyota Camry, commute five days a week, and drive 12,000 miles annually. These are sample rates for comparison only; individual quotes may vary. Age and gender rating factors may vary by state regulations.
