When Your Auto Insurance Rates Decrease
The general rule of thumb is that your car insurance premiums will start to decrease when you turn 25. Although thatâs typically true, 25 isnât a magic number. Your insurer wonât just flip a switch and give you a break solely because youâre a quarter-century old.
But assuming youâre a good driver, youâll probably start seeing decreases in your auto insurance every time yourenew your policy even before you turn 25. You might see an even greater decrease once you hit 25, because thatâs when insurers see a big drop in the number of claims submitted per age group.
Also, experience can matter more than actual age. Remember, your rates are set by a mix of aggregate data from people like you and your own personal driving history. If you get your license when youâre 26, youâll be paying higher rates than a 26-year-old whoâs been driving for a decade already because youâre still relatively green and more likely to get into accidents.
Similarly, if youâve had your license for a while but your driving skills arenât particularly up to snuff â maybe youâve had an accident or two â turning 25 wonât mean much because you havenât proven yourself to have earned a discount.
Average Auto Insurance Costs For A 20
For a 20-year-old driver with good credit and a clean driving record, average car insurance rates are:
$3,331 for full coverage.
$1,198 for minimum required coverage.
But young drivers with blemished credit or a less-than-perfect driving history are likely to shell out more for car insurance.
Good driver with good credit
Strategies For How To Make Your Car Insurance Go Down
- Don’t purchase unnecessary coverage. Bought a shiny new sports car? You will likely pay more to insure it, as you’ll want collision and comprehensive coverage commensurate with the car’s value. As your car’s value depreciates over time, however, consider reducing or eliminating collision and comprehensive coverage. If your car is only worth a few thousand dollars, it doesn’t make sense to shell out for high premiums to cover an asset of limited value.
- Team up with your spouse. If you’re married and each of you drives separate cars, you may be able to reduce your auto insurance payment by up to 32% through sharing a policy with your spouse, as insurers consider married couples more financially stable and risk-averse.
- Shop around for the best deal. Our research found that rates for 25-year-old drivers vary dramatically. Erie charges these drivers $1,518 for an annual policy, while Allstate charges $5,074 more than three times as much. Make sure you periodically shop around for the best deal.
It’s easy to get frustrated by the high quotes you’ll receive from insurers, particularly if you’ve been expecting your premiums to go down once you hit 25. But by thinking strategically and getting multiple quotes from different insurers, you can lower your rate by hundreds or even thousands of dollars.
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Average Car Insurance Costs For Good And Bad Credit
Having bad credit has a surprisingly large impact on auto insurance rates in most states. On average, car insurance rates for drivers with poor credit are more than 75% higher than for people with good credit.
Average car insurance rates for a driver with poor credit are:
$2,812 per year for full coverage.
$984 per year for minimum coverage.
Different Car Insurance Rates For Teenage Girls And Boys
Teens on a familys car insurance policy will be rated higher and differently, based on their gender, than older adults. If two parents have boy-and-girl fraternal twins, each getting their drivers license at the same time, the girl will initially receive a better rate than the boy, based on statistical data indicating a lower risk of accidents involving teenage girls, says Kevin Lynch, assistant professor of insurance at The American College of Financial Services in Bryn Mawr, Pennsylvania.
Heres why: According to the Insurance Institute for Highway Safety, 9.2 teenage male drivers die in automobile accidents for every 100 million vehicle miles, nearly double the death rate of 5.3 for female teenagers. This explains why insuring a teenage son typically costs 25% more than insuring a teenage daughter.
Over time, as both genders build their driving records, other insurance underwriting factors come into play. When the daughter turns 21, assuming she has a clean driving record, she will be treated for rate purposes as an adult and given standard adult rates, Lynch says. However, boys may not have standard adult rates until they reach age 25 if they have a clean driving record. Regardless of gender, teaching your teens safe driving is of the utmost importance, both for insurance rates and their safety. Here are some teen driving safety tips to help you get started.
At What Age Will My Insurance Rates Drop
This question gets asked a lot by younger drivers. One reason to wish to age another year: Your rates could possibly drop up to 50% once you reach age 25. For young men, your rates also go down at 19, 21, and 23 years of age.
Once you hit retirement age, you can qualify for another discount. If you are over 65 OR are receiving income under the Canada Pension Plan, you can receive a discount of around 3%. Its not much of a saving, but you may as well take advantage of anything you can get.
Answer: 25 years of age
Is Gender Is A Factor In Auto Insurance Rates
Along with age, gender plays a role in insurance costs. Young female drivers generally require fewer claims than young men, and, as a result, their insurance rates are lower.
THIS VARIES BY AGE, AS THE TABLE BELOW SHOWS
- Average per year rate for a male driver
- Average per year rate for a female driver
Again, gender is a key metric that will feed into the cost of your car insurance calculations, although the cheaper the person is to insure, the more feasible it will be to have them on their own insurance. Learn how your childs living situation can affect rates.
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How Do I Find An Insurance Company With Lower Prices
Some things that will make your car insurance cost go down are not within your control. But others are. For example, on a year when an insurance company has more claims paid, your insurance rates may go up. These things are not in your individual control, except that you may be able to find an insurance company that has better rates, even when others have higher ones. You should also look into state programs that may be able to help if you’re in need of low-income car insurance. Find a good deal by shopping around and checking which car insurance company is the best for your circumstance.
Does Car Insurance Go Down Every Year
If youâre a teen or young adult driver, your rates may drop every year until you turn 25, assuming you drive safely and donât have any accidents or violations. But after that, your rates wonât have a reason to decrease, and your premium will be determined by all the same factors that go into calculating rates for other drivers.
According to the Centers for Disease Control and Prevention , 2,333 teenagers between 16 to 19 were killed in motor vehicle accidents in 2014, while 221,313 were injured. Young driversâ reputation for speeding, lack of experience, plus activities like texting while driving and drunk driving mean an insurance company is apt to keep your rates on the higher side until you at least reach your mid-20s.
Beyond that, the type of car you drive always plays a role in your insurance rates, no matter how old you are. If youâre 25, have been driving the same car since high school and have few-to-no claims attached to it, your insurance rates are likely to drop.
But if you landed a lucrative gig out of college and used your hard-earned cash to buy a newer, nicer ride, your premiums will reflect the change of the vehicle.
âIf a driver at age 25 buys a sports car, they are probably not going to have a better rate than when they were previously driving a sedan,â Wright says.
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How Gender Affects Car Insurance Rates At 25
Insurance providers are big on data. They use analytics to model the price of auto insurance based on more than a dozen rating factors. That being said, female drivers tend to experience fewer problems behind the wheel than male drivers. Women are known to have fewer DUIs, as well as less serious accidents, according to the Insurance Information Institute.
All of this is backed up by statistics, which insurers use to decide the price of coverage based on their proprietary modeling. So women will typically pay less for their auto insurance, based on statistics showing them to be safer drivers.
Other Factors That May Affect Your Premiums
While your age plays a significant role in the cost of your auto insurance premium, other factors may impact the rate you pay, including:
- Where you live
- Your marital status
- Your driving record
Each of these factors may increase or decrease your premiums, regardless of your age. For example, a new sports car will cost more to insure than a five-year-old Honda Civic. If you live in a neighborhood prone to car theft and vandalism, you will pay higher rates than drivers who live in safer areas.
Most state insurance regulations allow auto insurers to use your credit history as a premium rating factor. If you have poor credit, you can expect to pay a higher insurance rate. If you live behind the wheel and drive extensively, you pay more for auto insurance than your friend who only drives a few miles per day.
Insurers like policyholders that dont pose much risk. Besides your age, driving record and credit rating, life events that signify maturity, like getting married and buying a house, can earn a reduced auto insurance rate.
So does your insurance go down at 25? It depends. Drive safe, avoid accidents, maintain a good credit score and forgo a fancy sports car, you should experience an insurance rate drop at age 25.
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Can You Negotiate Car Insurance Rates
Car insurance rates are regulated by states, so its not actually possible to negotiate a different amount. However, that doesnt mean you cant find a better rate elsewhere. Each insurer has a range of rates it offers based on a drivers profile, such as age, driving record and vehicle. That means auto insurance rates vary by company. So, by shopping around quotes from different insurers, you can hopefully find a policy that matches your budget.
How Auto Insurance Rates Are Set
When you apply for a car insurance policy, the insurance company wants to know several things about you, including:
Your driving record
Your credit history
The reason you need to provide so much information when applying for a new car insurance policy is because the cost of your car insurance premiums depends on you and people like you. That’s because insurance companies use demographic and statistical data to help determine how much you pay for car insurance. And while your credit history, marital status, and education level can help insurers gauge your level of risk, age is one of the biggest factors.
Teenage drivers tend to cause more accidents than older, more experienced drivers, so insurance companies raise your rates due to the high risk factor. However, there are things you can do to help lower your rates. How you drive is a big factor in determining your car insurance premiums, which is why your driving record gets pulled and considered by your car insurance company.
If you have a lot of traffic violations and accidents, you can expect to pay higher rates for your car insurance policy. Your experience behind the wheel is also a factor â if you just got your license, regardless of age, youâll be charged a higher premium for being an inexperienced driver.
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Why Doesnt My Car Insurance Rate Go Down As My Car Gets Older
As car insurance myths go, this is one myth that seems to have some real staying power. Many drivers think that their insurance will go down as their car depreciates, but this isnt necessarily true.
There are several reasons why your rates may not decrease as your car depreciates.
Combined, these two coverages, which have nothing to do with the value of your car, usually make up the majority of your premium dollar.
Other Ways To Save On Car Insurance
There are also several other things you can do to save money on your car insurance premiums that do not depend on your age. Some of these actions include:
- Reducing or dropping your collision coverage and carrying only liability insurance if you have an older car.
- Taking a defensive driving course. Similar to the safe driving program listed above, this type of course is relatively inexpensive and can sometimes net you a discount on your insurance, depending on the provider.
- Electing for an economy vehicle.
- Raising the deductibles on your collision and/or comprehensive insurance coverage. If you can establish an emergency fund of cash that has at least enough money in it to meet your increased deductible in the event of a claim, you will likely see a lower monthly premium.
- Avoid any speeding tickets on your record. Tickets will generally make your insurance go up, so if you have one and can take defensive driving to have it removed from your driving record, you can potentially avoid a costly insurance spike.
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What Age Does Car Insurance Go Down For Males
Car insurance rates begin to go down significantly for men by age 21, decreasing an average of 30 percent from ages 20 to 21. After that, car insurance premiums for men decrease steadily by $50 to $100 per year until they hit the lowest amount around age 64.
Its also important to note that males pay more for car insurance premiums from age 16 to 25. This is because theyre more likely to speed, get involved in accidents and participate in reckless driving than females at the same age.
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It Doesnt Happen Overnight But It Does Happen
Big changes in your life usually mean big changes in your insurance. “Its not often one company will offer the best deal in all circumstances,” says Penny Gusner, senior consumer analyst for Insurance.com. Thats why its a good idea to shop around for insurance and ensure youre getting the best deal.
How To Reduce The Impact Of Age On Your Car Insurance Rates
If you are still a teenager or under the age of 25, there are several things that you can do to reduce the cost of car insurance. Here are a few that can have a significant impact on the cost of car insurance for young drivers:
- Good student discount Many insurers will offer a discount to students who maintain a certain grade point average, such as B or B+.
- Safe driving program This program can help young drivers to spot potential causes of accidents before they happen and to be more alert to possible dangers when they drive. Completing the program often results in a nice discount that varies by provider offering the program.
- Monitoring app or device Helps determine rates based on driving behaviors and associated risk.
- Multi-car discount If you or your family insures multiple cars under one provider, you may see additional savings.
- Autopay discount This is especially helpful if the driver can pay for insurance for 6 months at a time.
- Safety equipment discount Rewards drivers whose vehicles include features designed to reduce possible damages and injuries in an accident.
- Away from home discount Particularly applicable to college-aged drivers.
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