Rumor has it that car insurance rates go down when you turn 25 years old. There's some truth to that, but like most things, it's complicated. Age matters, and 25, in particular, might matter extra, but your car insurance rate depends on other things, too. Below, we'll take a closer look at whether 25 is the magic number for car insurance.
Does insurance go down at 25?
Yes, car insurance premiums shrink for many drivers when they turn 25. But don't celebrate just yet. Your car insurance rate improves every year you maintain a clean driving record. The rate change from 24 to 25 might not be any more significant than the ones prior.
That's not all. Some drivers see their rates flatline, or worse, climb when they turn 25. Why rates drop could be due to several reasons, including gender, driving record, and time spent driving.
Reasons rates might not go down
When you turn 25, rates may not go down due to the following reasons.
Gender
Men often pay more for car insurance than women do, especially young men. Why? Some studies conclude young men are more likely than young women to get involved in fatal car accidents. Auto insurers dislike risk, so they hike rates to compensate.
A recent study by Zebra found that this gender gap narrows when drivers age. The study concluded teen boys pay 14% more than teen girls on average, but gender ceases to matter much by age 25.
Some states, like California, forbid insurers from considering gender. According to Capital One, men still tend to pay more in these states, but the gap isn't as wide. These states include California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania.
Bottom line: Young men may be more likely than young women to see rates drop significantly at 25, but not as much as in prior years. Young men in states that don't ban gender consideration may see their rates drop the most.
Driving record
Your driving record has a big impact on rates. If you get a speeding ticket, DUI, or if your car insurance company deems you at fault for an accident, your policy premium will probably fail to drop. If anything, it might go up. Auto insurers dislike unclean driving records.
On the flip side, your rates could go down big-time if you've kept your record clean since a prior accident. Many insurers only consider the last five years of your driving record. Once prior accidents fall off your record, auto insurers lower your rates.
Bottom line: A spotty driving record could flatline or hike your rates, even after you turn 25. But keeping your record clean for years after an accident could save you major cash.
Number of years on the road
The longer you've been driving, the lower your rates. As you age through 25 and older, your rates will probably continue to drop (up to a point). If you get your driver's license at 16, your rates could drop significantly over the following three to five years of clean driving history. Exactly how the number of years on the road factors into your rate depends on your insurance company.
Bottom line: Your rate should continue to decline with age, so long as you maintain a clean driving record (which means no at-fault accidents).
Why car insurance is more expensive for younger drivers
Car insurance is expensive for teen drivers because they have less experience on the roads. They're three times more likely to die in car accidents compared to older drivers, according to the Center for Disease Control and Prevention.
Insurers are aware of this risk, so they typically charge younger drivers a higher car insurance rate from the start. But the specifics depend on your car insurance company; some insurers consider age more than others. Most insurers care less as drivers get older. And the longer the driver has been on the road, the more the insurer rewards them for a clean driving record.
How much car insurance goes down at 25
Progressive estimates that car insurance rates go down 9% at 25. But even among those the company insures, this number varies. Gender, driving record, and number of years on the road are three of the potentially dozens of factors an insurance company uses to determine your rate.
Other considerations include your credit score, your location, and your car. The list is long; the best thing you can do to keep premiums low is focus on the stuff you can control. Example: You can't fast-forward your age, but you can maintain a clean driving record by driving safely.
Ways to lower auto insurance costs
Some insurers offer affordable car insurance for teen drivers. Here are some ways teens can shave a little off their car insurance premiums:
- Shop around: Every car insurance company evaluates risk differently, and some charge lower rates to drivers under 25. Ask for quotes from multiple companies to get the best deal. It's free, and car insurance quotes don't impact your credit score.
- Look for teen-oriented discounts: Some insurers offer "good student" discounts to teen drivers and drivers in their 20s. If you qualify, your insurer could drop your rates. You may be asked to remain in school or maintain high grades to qualify.
- Raise the deductible: Deductibles are the out-of-pocket costs drivers pay when they file a car insurance claim. Raise the deductible to lower monthly premiums; however, this will fray your financial safety net.
But the best thing you can do to keep rates low is to maintain a clean driving record. A clean record proves to insurers that you're a trustworthy driver and are therefore unlikely to file claims. If you get into a car accident, you may be limited to shopping for high-risk car insurance.
Don't drive much? Consider pay-per-mile insurance, a relatively new model that rewards you with lower premiums for driving less. It's worth considering for a better rate.
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FAQs
It's inconsistent. Some drivers report a significant car insurance premium decrease at 25, but this isn't the case for all drivers. Those who get their driver's license late or who have several accidents on their record may not notice much of a change at 25.
According to Progressive, rates typically go up at 18 and then steadily go down. Rates reverse course when drivers turn 75 or so, becoming more expensive. It may be that drivers older than 75 become progressively more high risk.
Every six months or so, when policies renew. But policies could get more expensive if you're determined to be at fault for an accident during your prior policy period.
Yes, typically. As drivers maintain clean driving records, insurers trust them more and reward drivers with better rates. But drivers sometimes negotiate with insurers to lower rates even faster. Some insurers will offer better rates to keep from losing you to a better-priced competitor. A good time to reach out is during a premium-lowering milestone, like marriage.
