Cheap car insurance for young drivers can be hard to find, but not impossible.
It is finally happening. It’s finally happening. You are independent, independent, and able make your own decisions. You probably know how to budget for groceries, rent, and car insurance. But you may not have thought to add these expenses to your monthly bills.
You can save money by shopping around for lower car insurance rates. While it is simple to compare auto insurance rates, finding affordable car insurance for young drivers is not easy. Young drivers have higher rates than other age groups, except teens.
Insurers view young drivers (those between 20-25 years old) as less experienced and more risky. According to the National Highway Traffic Safety Administration, drivers in their 20s and early 30s are more likely than older adults to be involved in a crash.
It’s possible to find cheap car insurance for young drivers. The best way to find lower rates is to shop around and compare car insurance quotes with at least three auto insurers.
What is the age of a young driver?
Some might classify a “young driver”, as someone between 16 and 25 years of age, or anyone below 30, but this analysis is focused on those aged 20 to 25. This breakdown provides a better representation of average auto insurance rates for young drivers, as car insurance rates can differ greatly for teenagers and young adults. The annual rates drop slightly after the age of 25, but not as much. Rates begin to rise once you turn 70.
Want to know more about teen car insurance rates and how it works? Check out our in-depth look at finding the cheapest car insurance for teens.
What is the cost of car insurance for young drivers
According to NerdWallet analysis of five major auto insurers, the average car insurance rate for young drivers is $2,241 per annum for full coverage. The average auto insurance rate for a 40 year-old driver is $1.523 per annum — $718 less annually.
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. State Farm, Geico and Progressive are the top five car insurance companies in the country. Allstate, Allstate, Allstate, and USAA* are the other.
Full coverage car insurance is a combination coverage. For our analysis, this includes liability, comprehensive, collision, uninsured/underinsured motorist protection and any additional state-mandated coverage. This analysis only applies to drivers who have good credit and a clean driving history. California, Hawaii Massachusetts, Michigan, Michigan, Washington and Washington do not allow insurers credit to determine car insurance rates.
These averages may give you an idea of what to expect when you shop around. However, they are not always a good indicator of what you will end up paying. Your final price will be affected by other factors such as your car model, auto insurer, gender, location, driving record, and your driving record. To help young drivers find the best car insurance, we have sliced the data several times.
Do you want a better estimate of your car’s insurance rate? NerdWallet’s car insurance comparison tool can help.
*USAA is only available to active military personnel, veterans and their families.
Which company has the lowest car insurance rates for young drivers
USAA is the most affordable of the five nation’s largest insurers. It offers both minimum and full coverage, as well as the lowest average annual insurance rates. Geico offers the lowest average auto insurance rates for those who do not have a military connection.
Rates can vary greatly from one company to the next because each insurer uses its own formula that takes into account factors like demographics, driving records and vehicle make/model. One insurer may charge 20% more to live in a high-crime area, while another might only increase rates by 10%. These formulas are not made public by car insurance companies. Shopping around is the only way to find the best car insurance.
Insurance rates for young drivers based on their age
Geico rates are the most affordable (aside from USAA) for all ages, according to our 2020 rate analysis.
Geico is the insurer with the lowest average rates, but it’s important that you note that this analysis only applies to the nation’s largest insurers. A smaller local insurer may offer lower rates.
Young drivers can get cheap car insurance by their state
Each state has its own car insurance company that is the cheapest for young drivers. For example, in Idaho, $679 is the lowest average full coverage rate, while Kentucky’s average rate is more than $2,000.
Rates can also be affected by state regulations. Hawaii, for example, doesn’t consider age when calculating its car insurance rates.
The table below shows you the best car insurance companies for young drivers. It also lists full coverage policies in your state. This table does not include USAA. Although it has the lowest rates, USAA is only available to military personnel and their families.
Insurance rates for young drivers based on gender
Gender matters when it comes to car insurance rates that young drivers can afford. The rate analysis of five of the largest insurers shows that young male drivers are more likely to have car insurance than young female drivers.
This is good news for male drivers, as the rate gap gets smaller with age. You can see that auto insurance rates for male drivers aged 20 years are 255 higher than those of female drivers. On average, rates for male 25-year-olds are $40 higher than those of their female counterparts.
Why is the rate for young men higher than for young women? Insurance companies believe that men are more inclined to drive at high risk.
A 2017 NHTSA study found that male drivers were more likely to be involved in fatal speeding crashes than women across all age groups. Drivers aged 21-24 years were more likely to be involved in speeding-related crashes than their male counterparts (31% vs 15%).
Young men need to shop around for car insurance in order to get a lower price. Geico’s average rate for young men is $63 lower than that for women. This is not bad considering that rates for young men using Allstate are on average $234 higher than those for young women.
Comparing rates can help even 20-year old male drivers who experience the largest rate differential compared to young drivers.
Young men can save hundreds of dollars a year by taking the time to shop around. On average, 20-year old men pay $445 more annually for car insurance than a woman of the same age. Geico rates for the same male profile are $87 more than those for a woman.
The average car insurance rate for young drivers varies by state
Because each state has its own regulations and requirements, location can have a significant impact on your auto insurance rates.
These are the average car insurance rates that a young driver would pay for full or minimal coverage, based on five of the largest national insurers.
Average cost of car coverage for 20-year olds, by state
The average annual car insurance rate for young drivers is 20 years old.
This is what our analysis shows about 2020 car insurance rates per state for 20-year old drivers with good credit ratings and no recent accidents.
- With an average annual rate $1,105, Hawaii is the most affordable state for full-coverage insurance. North Carolina and Idaho are close behind.
- Louisiana has the highest cost of full coverage at $5650 per annum (Kentucky was $1 lower).
- With an average annual rate $362, Hawaii is the least expensive state for minimum-required auto insurance. The next lowest yearly rates are in Iowa and North Carolina.
- Michigan’s minimum-required auto insurance is the most expensive at $2,605 per year.
Below is a breakdown of how your state ranks for minimum and full coverage for drivers aged 20 years old.
Average car insurance cost for 21-year olds, by state
Average auto insurance rates for 21 year-old drivers are $500 lower than those for 20-year olds when they have full coverage.
This is our analysis of 2020 car Insurance Rates by State for 21-year old drivers with good credit ratings and no recent accidents.
- With an average annual rate of $1,092 per person, Hawaii is the most affordable state for full-coverage insurance. North Carolina and Maine are close behind.
- Louisiana has the highest average cost for full coverage at $4646 per annum.
- Hawaii has the lowest minimum-required auto insurance rate at $358 per annum. Iowa and South Dakota have the lowest yearly rates.
- Michigan’s minimum-required auto insurance is the most expensive at $2,084.
Below is a breakdown of how your state ranks for minimum and full coverage for 21-year old drivers.
Average car insurance cost for 22-year olds, by state
NerdWallet analysis showed that auto insurance rates are about 7.7% lower than average for 22-year olds than for 21-year-olds.
This is what our analysis shows about 2020 car insurance rates per state for 22-year old drivers with good credit ratings and no recent accidents.
- With an average annual rate of $1,092, Hawaii is the most affordable state for full-coverage insurance. Massachusetts and North Carolina are close behind.
- Louisiana has the highest cost of full coverage at $4,160 an average per year.
- Hawaii has the lowest minimum-required auto insurance rate at $358 per year. The next lowest yearly rates are in South Dakota and Iowa.
- Michigan is the state with the highest minimum required car insurance, at $1,991 per year.
Average cost of car insurance per 24-year-old by state
As you enter your twenties, auto insurance rates will continue to drop. According to NerdWallet analysis, full coverage car insurance rates are 5.8% lower for a 24-year old driver than rates for a 23 year-old driver.
This is what our analysis of 2020 car-insurance rates by state shows about 24-year old drivers with good credit ratings and no recent accidents.
- Hawaii has the lowest cost for full-coverage insurance at $1,092 per annum, followed by Massachusetts, North Carolina, and North Carolina.
- Louisiana has the highest cost of full coverage at $3,728 an annual.
- Hawaii has the lowest average annual cost of minimum-required auto insurance at $358 per annum. On average, South Dakota and Iowa have the lowest yearly rates.
- Michigan’s minimum-required auto insurance is the most expensive at $1,800 per year.
Average car insurance cost for 25-year olds, by state
Between 20 and 25, rates drop dramatically. Average auto insurance rates for a 25 year old driver are 41% less than those for a 20 year old driver. These lower rates apply to young adults who have a clean driving record. Rates will rise for any recent DUIs, speeding tickets, or other traffic violations.
This is what our analysis of 2020 car insurance rates for young drivers shows. It applies to drivers who have good credit and have not been in any accidents or tickets.
- With an average annual rate $1,092, Hawaii is the most affordable state for full-coverage insurance. Maine and Ohio are close behind.
- Louisiana has the highest average cost for full coverage at $3202 per annum.
- Iowa has the lowest average annual cost of minimum-required auto insurance, at $315 per annum. The next lowest yearly rates are in South Dakota and Hawaii, respectively.
- Michigan is the state with the highest minimum required car insurance, at an average annual rate $1,504.
Young drivers should purchase their own car insurance
By staying on the parent’s auto insurance policy, teens can save hundreds of dollars. However, young drivers might not be eligible for such a significant price cut.
An individual policy is likely to be beneficial for young drivers who are moving to a state that has lower car insurance rates or has fewer insurance requirements. Some states may require that you purchase a separate policy. You will need insurance if you live on your own all year (and not just for college).
Your driving record, gender, credit score, and location all play a role in whether you are allowed to stay on your family policy. You might consider staying on your parent’s insurance for a longer period of time if you are a man, as rates for young men tend to be higher than those for young women.
How young drivers can get car insurance at a discount
Young drivers are more expensive than other age groups but you can still save. These tips can help you lower your rates.
Compare rates. Your rates will vary greatly depending on which insurer you choose. Young drivers, like all drivers, should shop around each year to ensure they have the best car coverage. You may not have the lowest rates one year ago, but that doesn’t necessarily mean you don’t still have them. When shopping around for insurance rates, compare the prices of a standalone policy to a family policy, if that is still an option.
Get discounts Numerous auto insurance companies offer discounts for young drivers, including:
- Good student discount.
- Take a defensive driving course to get a discount for young drivers.
- If you have a parent’s policy, student away-from-home discounts
- Multi-policy Discount if you have homeowners or renters insurance.
