Cheap Car Insurance for Young Drivers

It’s finally happened. You’re living on your own, independent from your family and able to make your own way. While most people know to budget for groceries and rent, you even remembered to include oft-forgotten expenses like car insurance in your monthly bills.

To cut costs, consider shopping around for a lower car insurance rate. Although comparing auto insurance rates is easy, finding cheap car insurance for a young driver is going to take some work. Rates for young drivers are higher on average than for most other age groups except teens.

Young drivers, or those between 20 and 25 years old, are less experienced and seen as a risk by insurers. In fact, drivers in their early 20s are more likely to get into a crash than older adults, according to the National Highway Traffic Safety Administration.

Still, finding cheap car insurance for young drivers isn’t impossible. The best way to find lower rates is to shop around and compare car insurance quotes with at least three auto insurers.

What age is a young driver?

While some might categorize a “young driver” as anyone 16 to 25 years old, or even anyone under 30, this analysis focuses on those 20 to 25 years old. Because car insurance rates for teens and young adults can vary significantly, this breakdown gives a more accurate depiction of the average auto insurance rates for a young driver. Annual rates generally continue to drop after age 25, but not as steeply. Once you reach 70, rates begin to increase on average.

How much is car insurance for young drivers?

The average car insurance rate for a young driver is $2,241 per year for full coverage, according to NerdWallet’s analysis of the five largest auto insurers in the nation. In comparison, the average auto insurance rate for a 40-year-old driver is $1,523 annually — $718 less per year.

To find these rates, we looked at 2020 average car insurance rates for young drivers from the five largest auto insurance companies in every ZIP code in all 50 states and Washington, D.C.  The top five car insurers in the country are State Farm, Geico, Progressive, Allstate and USAA*.

Full coverage car insurance refers to a combination of coverages. For our analysis, this includes liability, comprehensive, collision, uninsured/underinsured motorist protection and any additional state-mandated coverage. Rates in this analysis are for drivers with good credit and a clean driving record.

Although these averages can give you a better idea of what to expect as you shop around, average rates aren’t always a good indicator for what you’ll end up paying. Other factors like your auto insurer, car make and model, gender, location and driving record will impact your final price. We’ve sliced the data in several ways to help find the best car insurance for young drivers.

*USAA is available only to active military, veterans and their families.

What company offers the cheapest car insurance rates for young drivers?

Out of the nation’s five largest insurers, USAA offers the lowest annual insurance rates for young drivers, on average, for both full and minimum coverage. For those without a military connection, Geico has the cheapest auto insurance rates on average.

Rates can vary drastically from company to company because every insurer uses its own unique formula based on factors such as demographics, driving record and vehicle make and model. While one insurer might charge 20% more for living in a city with high crime, another might increase rates by only 10%. What’s more, car insurance companies don’t make these formulas public. The only way you can find the cheapest car insurance for you is by shopping around.

Auto insurance rates for young drivers

Here are the average annual rates for drivers ages 20 to 25 for full and minimum coverage from the largest companies.

Car insurance rates by age for young drivers

Geico has the cheapest rates (besides USAA), on average, for all ages in our young drivers 2020 rate analysis.

Although Geico has the lowest rates on average, it’s important to note this analysis is for the nation’s top insurers only, and a smaller local insurer might very well offer cheaper rates.

National average car insurance rates for drivers 20 to 22 years old

*USAA is available only to active military, veterans and their families.

National average car insurance rates for drivers 23 to 25 years old

*USAA is available only to active military, veterans and their families.

Cheap car insurance for young drivers by state

The cheapest car insurance company for young drivers varies by state. For example, the cheapest average full coverage rate for a young driver in Idaho is $679, while the cheapest average rate in Kentucky is over $2,000.

State regulations also impact rates. For instance, Hawaii doesn’t use age as a factor when calculating car insurance rates.

Use the table below to see the cheapest car insurance company for young drivers for a full coverage policy in your state. This table excludes USAA, which often has the cheapest rates on average but is available only to military members and their families.

Full coverage average rate

Southern Farm Bureau Casualty

Farm Bureau Financial Services

Farmers Mutual of Nebraska

Farm Bureau Financial Services

Farmers Mutual of Nebraska

Find the cheapest car insurance for young drivers in your state

In a separate 2020 rate analysis, NerdWallet looked at the 5 cheapest car insurance companies for 25-year-old drivers with various backgrounds and credit histories in every state.

Find the cheapest car insurance companies for good young drivers in your state below.

Car insurance rates for young drivers by gender

When it comes to car insurance rates for young drivers, gender matters. Our rate analysis of the top five largest insurers show that on average young male drivers have higher car insurance rates than young female drivers across all ages.

The good news for men is that this rate difference gets smaller with age. As you can see below, auto insurance rates for 20-year-old males are $255 more on average per year than a female driver. However, rates for 25-year-old males are only $40 more per year, on average, than their female counterparts.

Average car insurance rates for young drivers by age and gender

Why are rates for young men higher than rates for young women? Insurers believe men are more likely to take risks while driving.

According to a 2017 study from the NHTSA, male drivers were involved in more speeding-related fatal crashes than female drivers across all age groups. Among drivers 21 to 24 years old, 15% of females were involved in a speeding-related crash compared with 31% of males.

To find a better price, young men should take shopping around for car insurance seriously. For example, average rates for young men from Geico are only $63 higher than for women. Not bad, considering rates for young men who use Allstate are $234 higher on average than for young women.

Best car insurance for young drivers by gender

*USAA is available only to active military, veterans and their families.

Even 20-year-old male drivers, who see the biggest rate difference compared with women in the young drivers demographic, can save by comparing rates.

Taking time to shop around could save young men hundreds of dollars per year. For example, car insurance rates for 20-year-old men with Allstate are $445 more per year, on average, than for a 20-year-old woman. Meanwhile, rates from Geico for the same male profile are $87 higher, on average, than for a female.

Cheap car insurance by gender for 20-year-olds

*USAA is available only to active military, veterans and their families.

Average car insurance rates for young drivers by state

Location can make a big difference when it comes to your auto insurance rates, mainly because each state has different regulations and requirements.

Here are the average car insurance rates for a young driver in each state and Washington, D.C., for full and minimum coverage based on the nation’s five largest insurers.

Average cost of car insurance for 20-year-olds by state

Of the young drivers demographic, 20-year-old drivers have the highest annual car insurance rates on average.

Here’s what our analysis of 2020 car insurance rates by state shows for 20-year-old drivers with good credit and no recent accidents:

  • Hawaii is the cheapest state for full coverage insurance with an average annual rate of $1,105, followed by North Carolina and Idaho.

  • Louisiana is the most expensive state for full coverage at $5,650 per year on average (In Kentucky, the average was only $1 less per year).

  • Hawaii is the cheapest state for minimum-required car insurance with an average annual rate of $362. North Carolina and Iowa have the next cheapest yearly rates on average.

  • Michigan has the most expensive minimum-required car insurance on average per year at $2,605.

See below for how your state stacks up for both full and minimum coverage rates for 20-year-old drivers.

Average cost of car insurance for 21-year-olds by state

On average, auto insurance rates for 21-year-old drivers are around $500 lower per year than for 20-year-olds for a policy with full coverage.

Here’s what our analysis of 2020 car insurance rates by state shows for 21-year-old drivers with good credit and no recent accidents:

  • Hawaii is the cheapest state for full coverage insurance with an average rate of $1,092 per year, followed by North Carolina and Maine.

  • Louisiana is the most expensive state for full coverage at $4,646 per year on average.

  • Hawaii is the cheapest state for minimum-required car insurance with an average rate of $358 per year. South Dakota and Iowa have the next-cheapest yearly rates on average.

  • Michigan has the most expensive minimum-required car insurance annually on average at $2,084.

See below for how your state stacks up for both full and minimum coverage rates for 21-year-old drivers.

Average cost of car insurance for 22-year-olds by state

On average, you can expect auto insurance rates to be about 7.7% lower for a 22-year-old than for a 21-year-old, NerdWallet’s analysis found.

Here’s what our analysis of 2020 car insurance rates by state shows for 22-year-old drivers with good credit and no recent accidents:

  • Hawaii is the cheapest state for full coverage insurance with a yearly rate of $1,092 on average, followed by North Carolina and Massachusetts.

  • Louisiana is the most expensive state for full coverage with an average annual rate of $4,160 on average.

  • Hawaii is the cheapest state for minimum-required car insurance with an average annual rate of $358. Iowa and South Dakota have the next cheapest yearly rates on average.

  • Michigan has the most expensive minimum-required car insurance with a yearly rate of $1,991 on average.

See below for how your state stacks up for both full and minimum coverage rates for 22-year-old drivers.

Average cost of car insurance for 23-year-olds by state

Although your car insurance rates likely won’t drop dramatically when you turn 23, the average car insurance rate for a 23-year-old was 29.4% lower than the average rate for a 20-year-old driver in our analysis.

Here’s what else our analysis of 2020 car insurance rates by state shows for 23-year-old drivers with good credit and no recent accidents:

  • Hawaii is the cheapest state for full coverage insurance with an average annual rate of $1,092, followed by North Carolina and Massachusetts.

  • Louisiana is the most expensive state for full coverage at $3,933 per year on average.

  • Hawaii is the cheapest state for minimum-required car insurance with an average rate of $358 per year. Iowa and South Dakota have the next cheapest yearly rates on average.

  • Michigan has the most expensive minimum-required car insurance on average per year at $1,861.

See below for how your state stacks up for both full and minimum coverage rates for 23-year-old drivers.

Average cost of car insurance for 24-year-olds by state

Auto insurance rates continue to slowly drop as you reach your mid-20s. Full coverage car insurance rates for a 24-year-old are 5.8% lower, on average, than a 23-year-old driver’s rates, according to NerdWallet’s analysis.

Here’s what else our analysis of 2020 car insurance rates by state says about 24-year-old drivers with good credit and no recent accidents:

  • Hawaii is the cheapest state for full coverage insurance at $1,092 per year on average, followed by Massachusetts and North Carolina.

  • Louisiana is the most expensive state for full coverage with an average annual rate of $3,728.

  • Hawaii is the cheapest state for minimum-required car insurance at $358 per year on average. Iowa and South Dakota have the next cheapest yearly rates on average.

  • Michigan has the most expensive minimum-required car insurance on average per year at $1,800.

See below for how your state stacks up for both full and minimum coverage rates for 24-year-old drivers.

Average cost of car insurance for 25-year-olds by state

Rates drop significantly between 20 and 25. On average, auto insurance rates for a 25-year-old driver are 41% lower than for a 20-year-old driver. Of course, these lower rates are for young adults with a clean driving record. Any recent DUIs, speeding tickets or other traffic infractions will increase rates.

Here’s what our young drivers analysis of 2020 car insurance rates shows for drivers with good credit and no recent accidents or tickets:

  • Hawaii is the cheapest state for full coverage insurance with an average annual rate of $1,092, followed by Maine and Ohio.

  • Louisiana is the most expensive state for full coverage at $3,202 per year on average.

  • Iowa is the cheapest state for minimum-required car insurance at $315 per year on average. South Dakota and Hawaii have the next cheapest yearly rates on average.

  • Michigan has the most expensive minimum-required car insurance with an average annual rate of $1,504.

See below for how your state stacks up for both full and minimum coverage rates for 25-year-old drivers.

Should young drivers buy their own car insurance?

Teenagers generally save hundreds of dollars by staying on a parent’s car insurance policy. Young drivers, however, might not get such a big price break.

Young drivers who move to a state with lower car insurance rates and fewer minimum insurance requirements would likely benefit from an individual policy. However, some states might require you buy a stand-alone policy. If you’re living on your own year-round (and not just for college), you’ll need to buy your own insurance regardless.

Whether you should stay on your family’s policy depends on a number of factors including your driving record, gender, credit score and location. For example, since rates for young men are generally higher than for young women, you might want to stay on a parent’s insurance longer if you’re a male.

How young drivers can save on car insurance

Rates for young drivers may be more than most other age groups, but it’s still possible to find ways to save. Use these tips to reduce your rates:

Shop around. As discussed, your rates can differ tremendously based on the insurer you use. To make sure you have the best car insurance, young drivers (like all drivers) should consider shopping around every year. After all, just because you had the cheapest rates a year ago doesn’t mean you still do. As you shop around, remember to compare rates for a stand-alone policy versus staying on your family’s insurance, if that’s still an option.

Take advantage of discounts. Many auto insurers offer discounts that cater to young drivers including:

  • Discount for young drivers who take a defensive driving course.

  • Student away-from-home discount (if you are on a parent’s policy).

  • Multi-policy discount if you have renters or homeowners insurance.

Usage-based insurance. If you’re a good driver, you might benefit from usage-based insurance. Usage-based policies still use factors like location, and age, but also use your driving behavior to determine your car insurance rate. Driving habits like speeding and hard braking are generally gathered through a plug-in device or a smartphone app. Root specializes in usage-based insurance, while some traditional insurers like Progressive also offer this option.

Pay-per-mile insurance. Unlike traditional insurance, premiums for this type of policy depend on how many miles you drive each month. This is also usually calculated by a plug-in device or smartphone app. If you have a remote job or don’t drive a lot, this could cost less than traditional insurance. Some companies, like Metromile, specialize in this type of insurance, while a few large insurers, such as Nationwide, also offer a per-mile option.

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