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Tips on Finding Affordable Car Insurance for Drivers Under 25

    5 minute read

    Few moments in life are as exciting as purchasing your first car. Whether it’s a new vehicle off the lot or a used purchase, your first car represents a step into adulthood. However, the excitement may wear off for many young drivers when searching for car insurance. Although younger drivers typically experience higher insurance rates than others, there are ways to find affordable car insurance if you’re under 25.

    Key takeaways:

    • Comparing auto insurance quotes is highly important to find affordable rates for drivers under 25.
    • There is no age limit for how long a child can remain on a parent’s auto insurance policy.
    • Although only purchasing liability insurance can help you obtain a low premium, you could be left with major out-of-pocket expenses in the event of an accident.

    Do Young Drivers Pay More for Car Insurance? 

    a young driver and their father in the car together

    Yes, young drivers under 25 typically pay more for car insurance than other drivers on the road. One of the main reasons for this is that motor vehicle crashes are one of the leading causes of death for U.S. teens, according to the CDC. Combine that with less years of driving experience, and it’s easy to see why insurers consider young drivers as greater insurance risks, which leads to higher premiums. Although it varies heavily by state and company, most drivers begin to see favorable rates at age 25.

    When determining a driver’s insurance premium, car insurance companies consider multiple factors, such as driving experience, age, zip code data, and vehicle information. However, some states and companies may weigh some factors more than others. Insurance providers in California, for example, use years of driving experience as a rating factor instead of age. Details aside, young drivers can find favorable auto insurance rates by following a few important insurance tips.

    Ways Drivers Under 25 Can Save on Car Insurance

    1. Remain on a Family Policy 

    Unlike health insurance, there is no age limit for how long a child can stay on a parent’s car insurance policy. If you share the same address,  you can significantly save by being added to a parent’s policy rather than finding your own. Although adding a new driver will increase rates, it likely won’t be as much as a stand-alone policy. Even if you aren’t considered a “young driver,” you can remain on a family policy as long as you live with your parents. In fact, insurance providers prefer that all drivers living in the same residence be listed on one auto policy.

    2. Shop Around for Quotes

    If you don’t have the option of joining a family policy, your next best bet to secure affordable auto insurance is to compare quotes from multiple providers. As mentioned, insurers consider numerous factors when determining auto premiums. Due to varying pricing models, it’s possible to see major differences between auto premiums from two separate companies for the same driver. Some may even offer better rates for young drivers despite their lack of experience. By comparing rates, you’ll better understand your coverage options. With AIS, you can easily compare quotes from our network of insurance providers by using our online comparison tool.

    3. Bundle Car and Residential Insurance

    Whether you rent or own a home, you may qualify for savings and discounts when you bundle policies with the same insurer. If you have renters or homeowners insurance with a major company, they will likely also offer car insurance. This will help you save on your insurance rate, and possibly consolidate two bills into one for easier management.

    4. Consider Your Deductible  

    Adjusting your coverage deductibles is another way to save on your auto insurance premium. Coverages such as collision and comprehensive insurance are subject to a deductible, which represents the amount you must pay out of pocket towards a claim before your insurer handles the rest, up to your policy’s limits.

    When you sign up for coverage, you usually have the option to select your deductible amount. A $500 deductible is standard but can range anywhere from a few hundred dollars to $2,000. Choosing an appropriate amount is important as your decision can affect your rates. Here’s how:

    • A high deductible = a lower insurance rate but higher out-of-pocket expenses for claims.  
    • A low deductible = a higher insurance rate but lower out-of-pocket expenses for claims. 

    As shown, a higher deductible can lead to a lower insurance rate. Since deductibles allow insurers to share risk with policyholders, adjusting your deductible amount can quickly affect your premium. However, you should only consider a higher amount if you won’t have difficulty paying your share in the event of an accident.

    5. Utilize Common Car Insurance Discounts

    a student doing homework on their laptop

    Auto insurance providers offer a handful of discounts you may qualify for by simply being who you are. When searching for affordable car insurance for young drivers, taking advantage of available discounts is essential. Here are some typical car insurance discounts young drivers may qualify for:

    • Good student discount – If you’re a full-time student, have a B-average or higher, and are under 24, you likely qualify for a good student discount. Although qualifying specifics may vary depending on the company, most insurers offer this discount for high-school or college students, so be sure to ask for it when signing up for a new policy.
    • Defensive driving course discount – Insurance providers base their rates on risk, which is why some insurers offer discounts to policyholders that complete defensive driving courses. If you’re a young driver, taking a defensive driving course is highly recommended to prevent accidents by improving your assessment and situational skills.
    • Multi-policy discounts – Multi-policy discounts are one of the easiest discounts to qualify for. As mentioned, you can easily save by bundling policies with the same provider. 
    • Anti-theft device discount – Cars with anti-theft measures installed have a lower chance of being stolen or vandalized, making them less risky to insure. As a result, providers may offer discounts to owners that take extra steps toward protecting their vehicles. 

    6. Consider the Car You Drive

    a newly licensed young driver holding up the keys to their new car

    Your vehicle’s make and model can affect your insurance premium, especially if you carry collision and comprehensive coverage. The more expensive your car is, the more it will cost to repair or replace it after an accident. If you’re planning to purchase a new car, we recommend comparing quotes from different providers before you buy to get an idea of how much you’ll pay for insurance.

    Should I Only Purchase Liability Insurance?

    In seeking lower rates, you might be tempted to reduce your coverage to only liability coverage (the legal minimum in most states). For most drivers, this is not the best idea. Unless you can afford to replace your vehicle out of pocket if you cause an accident, it is recommended you have collision and comprehensive coverage on your policy, in addition to liability, as this provides significantly more protection.

    Learn More by Speaking with an Insurance Specialist

    Everyone’s insurance needs are different, regardless of age or driving experience. If you lease or finance a car, you’ll most likely require more coverage than someone who drives an older vehicle. Regardless of your situation, speaking with an insurance specialist will help guide you through your options.

    At AIS, we have over 55 years of experience helping our customers compare auto quotes to find their ideal combination of coverage and price. To learn more about how AIS can help, call us today at (888) 772-4247 or start your search online.

    The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may be different than those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.