Why is Insurance Higher for Drivers Under 25?

Drivers under 25 years old typically pay much higher auto insurance rates than older drivers. There are several reasons why car insurance costs more for young drivers under 25.

The main factors leading to expensive auto insurance for young drivers include:

  • Lack of driving experience
  • Increased risk of accidents
  • Distracted driving behaviors
  • Overconfidence behind the wheel
  • Lack of credit history

Insurers consider young drivers to be high risk, which leads to significantly higher premiums. However, there are ways for teen and young adult drivers to get more affordable rates.

Below we’ll explore in detail why drivers under 25 pay so much for car insurance and how they can save money.

Why Is Car Insurance More Expensive for Young Drivers?

Insurance companies charge drivers under 25 higher premiums for several reasons:

Inexperience Behind the Wheel

Lack of experience is a major factor in insurance rates for young drivers. Teenagers who just got their license have very little time behind the wheel. Statistics show drivers gain competency over time.

In the first few years driving, younger motorists are more likely to make errors like:

  • Forgetting to check blind spots
  • Misjudging gaps in traffic
  • Driving too fast or aggressively
  • Panicking and overcorrecting in difficult situations

These mistakes can lead to accidents and claims. With limited experience reacting to hazards on the road, insurers see young drivers as riskier to insure.

Higher Accident Rates

The lack of experience translates directly into more accidents for newer drivers.

  • Drivers ages 16-19 have the highest rates of crashes, injuries, and fatalities among all age groups according to NIH data.
  • The crash rate per mile driven is nearly 3 times higher for 16-19 year-olds than drivers 20 and over.
  • Fatal crashes are over 4 times more common among 16-19 year old drivers than among those 45-54 years old.

Higher accident rates mean increased payouts for insurance companies. So premiums are set higher to account for the added risk.

Distracted Driving

Today’s youth admit to more distracted driving behaviors like texting or talking on the phone when behind the wheel.

Studies by the NHTSA show young drivers are more likely to:

  • Text or email while driving
  • Drive while drowsy
  • Drive too fast for conditions
  • Make poor decisions due to inexperience

These dangerous habits lead directly to more accidents. Texting while driving dramatically increases crash risk for all groups, but especially for teens and young adult drivers.


Lack of experience can also translate into overconfidence behind the wheel by young motorists. Feeling invincible leads some newly licensed drivers to make poor decisions like:

  • Speeding
  • Tailgating
  • Quick acceleration
  • Racing or showing off
  • Operating the vehicle while impaired

These behaviors expand the risk of getting into an accident. Insurance companies boost rates to account for the results of overconfidence on the road.

Less Established Credit History

Younger drivers are less likely to have a lengthy credit history built up over many years. Some states allow insurers to factor in credit-based insurance scores when pricing auto policies.

With little or no credit available, teens and young adults often fall into higher risk credit tiers. Less-established credit correlates with higher insurance rates in these states.

For young drivers with no loans or credit cards, it can help to be added as an authorized user on their parents’ account. This can help establish credit history even before getting their own card.

How Can Young Drivers Get Cheaper Rates?

Despite the reasons for high costs, there are many ways for drivers under 25 to save on car insurance:

  • Ask about discounts for young driver training programs
  • Maintain excellent grades for a good student discount
  • Join a parent’s policy to avoid young driver fees
  • Choose an affordable, safe car to insure
  • Limit miles driven to earn lower mileage discounts
  • Shop around to compare rates from multiple insurers

Taking additional driving courses and driver training can provide big savings on insurance for younger motorists. Avoiding speeding tickets and accidents also keeps rates low by limiting high-risk behaviors.

Comparing quotes from different insurers is important to find the best rates. Some companies specialize in lower cost policies for high-risk youthful drivers.

Average Car Insurance Rates by Age

Average car insurance rates decline steadily as drivers gain more experience over time. Here are the average monthly premiums by age according to 2021 insurance industry data:

Driver Age Average Monthly Premium
16 $616
17 $572
18 $548
19 $528
20 $488
21 $462
22 $450
23 $436
24 $428
25 $414
35 $78
45 $70
55 $62

Premiums start dropping more quickly after age 25, as the highest risk years for most young drivers come to an end. By ages 35-55, average rates are only about 15% of those for teen drivers.

This demonstrates the substantial impact of youth and inexperience on auto insurance costs.

Discounts for Young Drivers

While insurance is still pricey for drivers under 25 compared to older groups, many discounts are available to lower costs.

Some of the most common discounts for younger drivers include:

  • Good Student Discount – For maintaining a B or better grade point average. Can save up to 15% or more.

  • Student Away at School Discount – If you live away from home without using a car. Saves up to 25%

  • Driver’s Education Discount – For completing an approved driving safety course. Saves up to 10%.

  • Defensive Driver Discount – For completing a defensive driving class. Saves 5% to 15%.

  • Good Driver Discount – For avoiding tickets, accidents, and claims. Saves up to 25%.

  • Multi-Policy Discount – For insuring multiple vehicles or bundling auto with home insurance. Saves up to 15%

  • New Vehicle Discount – For insuring a new or newer model vehicle. Saves 10% or more.

Ask your insurer about all possible discounts to maximize your savings as a young driver under 25. Every discount you qualify for will help lower your insurance premium.

How Young Driver Fees Impact Cost

In addition to higher risk-based pricing, many insurers add on young driver fees to policies covering drivers under 25.

These fees help offset the greater losses for newer motorists. Some companies charge fees per driver, while others add a flat young driver fee to any policy covering a youthful operator.

Young driver charges can add anywhere from $20 up to $150 or more per month on top of the base premium.

By shopping comparison quotes, you can find auto insurance companies that don’t penalize good drivers under 25 with these extra fees. Avoiding young driver charges helps lower costs.

Does Auto Insurance Cost Go Down at 25?

Most insurers provide some discount or reduction in premiums once a driver reaches 25 years old. However, the decrease varies significantly by insurer.

Some companies offer very large price breaks at 25, while others scale discounts gradually over many years of experience. With any insurer, maintaining a clean driving record will maximize savings.

Rates really start to go down once a driver reaches their late 20s and early 30s. By then, over a decade of safe driving experience has been established.

To get the cheapest rates at 25, shop around for a company that provides the maximum young adult discount.

And always compare quotes from multiple insurers when your policy is up for renewal to find the lowest premium.

Cheapest Car Insurance Companies for Under 25

The cheapest insurance companies for young drivers under 25 years old include:

  • State Farm – State Farm offers discounts including 25% off for taking driver training.

  • Geico – Geico provides a 16% discount for completing defensive driver training.

  • Progressive – Progressive offers the Snapshot program for up to 30% off through smart driving monitoring.

  • Allstate – Allstate has a 35% discount for being claim-free and 15% for a new vehicle.

  • Farm Bureau – Farm Bureau offers young driver discounts plus lowest overall rates among major insurers.

To find the most affordable rates for your situation, we recommend comparing quotes from at least 3 of these top auto insurers offering the best discounts for younger drivers.

Tips to Lower Rates for Young Drivers

Here are some top tips for younger motorists to save money on their car insurance policy:

  • Compare quotes from at least 5 different insurance companies to find the lowest rates.

  • Ask about all possible discounts from each insurer to maximize potential savings.

  • If living away from home at school, see if you qualify for a ‘distant student’ discount.

  • Try having your car registered and insured at your parents’ address if lower rates

Will my auto insurance decrease when I turn 25?


Why is car insurance so expensive for people under 25?

While your auto insurance rates may drop at age 25, they will go down the most when you turn 19 (a 16% savings) and when you turn 21 (a 17% drop). The reason car insurance is expensive for drivers under age 25 is because younger drivers are statistically more likely to get into an accident than older drivers.

Why an individual under 25 will pay more than an individual over 25 on an insurance policy?

On average, the premium for a new auto insurance policy is cheaper for a 25-year-old than for a 24-year-old—at Progressive, for instance, rates on new policies drop by a whopping 9%. That’s because drivers under the age of 25 are statistically more likely to cause an accident and file an insurance claim.

Does your insurance go down as soon as you turn 25?

Usually, yes. At Progressive, rates drop by 9% on average at age 25. But there are other cost factors impacting your car insurance, such as your claims history. So if you’re in an accident right before you turn 25, your rate may not drop.

Why is insurance so high for 20 year old?

This is often because young men (such as 20-year-old male drivers) have significantly higher accident rates than female drivers, so they pay more for auto insurance coverage.

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