Under 21 and looking for affordable car insurance? Here’s how to get the coverage you need.
Getting your first car is a rite of passage. You finally have the freedom to go where you want, when you want. But owning a car also comes with responsibility, and one of the first things you need to do before hitting the road is take out a car insurance policy.
However, choosing the right policy can be tricky. Not only are there lots of choices of insurance companies to choose from, but as a young driver it can be difficult to find affordable coverage. Let’s take a closer look at how to find the right car insurance for your needs.
Compare auto insurance providers for under 21-year-olds
What's in this guide?
Most states require car insurance for every driver. You need it to protect you if you’ve been involved in an accident. Insurance protects you, your passengers and other people involved in an accident.
But car insurance provides coverage for much more than just accidental damage. If your car catches fire, is stolen or vandalized or is damaged by storm, hail, explosion or even earthquake, your policy can help cover the cost of repairs to get you back on the road. If using your vehicle results in property or vehicle damage to a third party, your policy can offer legal liability coverage to provide the protection you need.
As a young person you’ll find you’ll pay more for coverage. This is because countless studies have found that younger drivers have more accidents than other drivers. People under 21 are more likely to take risks and make questionable decisions with their cars.
Car insurers set their premiums based on the likelihood of you making a claim. The greater the risk, the higher your premiums. This is bad news for drivers under the age of 21, as they are statistically much more likely to be involved in an accident. Car insurance costs substantially more for drivers under the age of 25 and purchasing coverage can be one of the major expenses you need to contend with when you get your first car.
Car insurance quotes for drivers under 21
Some car insurance providers can offer better rates to new and teenage drivers. Compare sample annual quotes for a driver living in New York who’s 20 years old, has good credit and wants premium coverage for her 2017 Honda Pilot SUV. While not representative of costs in every state, these example rates should give you an idea of how varied premiums can be and which companies to compare to get your unique quote based on your driving history, vehicle and location.
|Company||Average annual rate||Learn more|
|State Farm||$3,736||Read review|
What factors affect my premium costs?
While the numbers above are average for the state of New York, your premium may be different. There are a number of other factors that have an impact on the cost of under-21 car insurance.
- Your driving experience. Generally speaking, the more driving experience you have, the less you pay for coverage . Your involvement in any accidents and any past fines and infringements will also be taken into account, and so will any defensive driving courses you’ve taken.
- Your claims history. Previous car insurance claims will impact the cost of your premiums.
- Your gender. Young male drivers are statistically more likely to be involved in an accident than young female drivers, which means men pay more for coverage than women.
- The kind of car you drive. If you’re driving an older car without minimum safety or anti-theft devices, it will cost more to cover. Additionally you’ll pay more if you have a high-performance vehicle or drive a car with modifications. The higher the amount your car is covered for, the more you will have to pay for cover. For example, a late-model luxury car will obviously have higher premiums than a cheap, three-door hatch.
- Where the car is kept. Cars kept locked in a secure garage overnight are less likely to be stolen and therefore cheaper to insure. They’re also less likely to sustain damage than vehicles parked on the street.
- Where you live. If you live in an area with a high crime rate, this could mean you pay higher premiums than someone who lives in a “safer” area. The type of driving you do will also be a factor, such as if you drive on busy city roads in peak hour traffic, or if you only ever take short trips on quiet country roads.
- How often you drive. If you cover 30,000 miles each year in all sorts of driving conditions, you’ll pay more for coverage than someone who only drives a total of 5,000 miles a year to their local shops and back. You can even save more with mileage-based discounts.
- The features you select. Additional features such as roadside assistance will also drive up the cost of coverage.
- When you pay your premium. Some insurers will charge more for coverage if you pay your premium in monthly installments rather than in an annual lump sum.
- Qualifying discounts. You may be able to earn a no-claim discount for every year you do not make a claim on your policy. You can also get discounts for being a good student.
Most states require you to have a minimum coverage plan before you hit the road, no matter your age. Here are your choices when looking at your options for coverage:
- Liability. When drivers talk about auto insurance, they’re usually referring to liability coverage. This is the insurance that covers you if you’re at fault in an accident and need to pay for the resulting costs. All states except New Hampshire, Iowa and Virginia require you to have at least liability insurance.
- Comprehensive. Insures against damages that aren’t within your control, such as natural disasters, terrorism, explosions and fire, glass damage, falling objects, vandalism, damage from animals and theft. Unlike liability insurance, you’re not required to have comprehensive coverage regardless of the state you live in.
- Collision. If you’re at fault in an accident, your liability insurance kicks in and pays for the other driver’s costs. For your own vehicle repairs, you’ll need collision coverage. Collision coverage pays for costs if your vehicle is damaged.
- Medical payments. Helps you with your medical costs resulting from a car accident — no matter who’s at fault. It covers you and your passengers pays for such expenses like ambulance fees, surgery, funerals, dental care, prosthetic limbs and hospital visits. Medical payments coverage will also protect your when you’re walking or riding your bike.
- Gap insurance. This covers you if your car is stolen or totaled and you owe more on a loan than your car is worth.
- Personal Injury protection (PIP). If you’re involved in a car accident, PIP pays for the medical services you may need afterward including ambulance rides, nursing care, prosthetics, lost income, childcare and funeral services. PIP will apply regardless of who’s at fault in an accident.
- Property damage liability. Will help you pay costs that result from any damages you cause to someone else’s property. These costs may include vehicle repairs, repairs for damage to buildings, houses or fences, lost income from business closures, legal fees from property damage claims. Property damage liability doesn’t pay for your own car repair costs. For that, you’ll need collision coverage.
- Bodily injury liability.Your insurer will help you pay costs that result from any injuries you cause to another person. These may include immediate medical aid, legal help, health care, funerals and pain and suffering. Bodily injury liability coverage doesn’t pay for your own medical costs. For that, you’ll use your own health insurance, medical payments coverage or personal injury protection.
- Umbrella. Protects you beyond the coverage offered by your basic insurance. It’s especially recommended for individuals with significant assets — those who stand to lose a lot from getting sued. It will pay for what you owe beyond what’s covered by your home, auto or renters insurance.
- Uninsured or underinsured motorist. This covers you if you have an accident, and the person who is at-fault doesn’t have enough coverage to pay for the damages to your car. You can choose to have bodily injury (UMBI) or property damage (UMPD) coverage.
Considering the cost of under-21 car insurance, it’s definitely worth having a conversation about adding a teenage driver to their parents’ policy. If this is an option, if you share a car with your parents and they’re happy to include you in their coverage, you could ask your parents to add you as a nominated driver to their car insurance policy.
While this will cause their premiums to rise, the added cost is cheaper than if you were to take out a separate policy for yourself. Even if your parents ask you to chip in to help cover premiums, you’ll still save money.
Tips for saving money when adding a teenager to a car insurance policy
- Take a driver’s education class. Drivers who take driver’s education classes present less risk to insurers and may get better prices.
- Spend time driving together. Guiding and coaching advice from parents will help young drivers through their first year on the road, which is particularly the riskiest.
- Consider a family car. Instead of choosing a car that’s just for the new driver, consider buying a car that is the “family car“ to share. You can save on your insurance if your teenager isn’t the primary driver and it’s a shared car.
- Ask your teenager to research the car. This research report will help them understand the costs of the car, a valuable lesson in budgeting. With a better understanding of the vehicle and its safety features, this might help them take more care and consideration with the vehicle.
- Choose a safer car for your teenager. Midsize cars with electronic stability control and lower horsepower tend to score better.
Save on car insurance with good grades
Some insurers provide better rates for teenagers with better grades, as they typically get involved with fewer car crashes. Requirements typically require the student:
- Maintains a report card with a B average or 3.0 grade point average or be on the Dean’s List or honor roll
- Provides a letter signed by your school’s administrator of being a good student
- Is younger than 25 years old
You may need to reprove your good student status each time that you renew. Home schooled students can qualify, and will need to qualify in the top 20% of standard tests like the SAT or ACT.
If you’re looking for an under-21 car insurance policy, it’s vital to compare your options to find the policy that’s right for you. Factors to consider when weighing up your options include:
- The cost. Cost is going to be an important factor for anyone purchasing a policy, so get quotes from a number of different insurers to see which is the cheapest car insurance. Remember to look beyond the dollar figure to the benefits and limits of each policy to ensure you’re getting a good value.
- What’s covered. Read over your policy to find out exactly when you’re covered and what you’re covered for. Does the policy offer new-for-old replacement if your vehicle is a total loss? What about cover for emergency repairs, transport and accommodation? Can you choose your own mechanic and is there a lifetime guarantee on repairs? Can you cover your car to the agreed value, its market value or either option?
- What’s not covered. Next, check the limits that apply to the policy to see if one policy offers a higher level of protection than the competition. Also check the list of general exclusions so you know when and why the insurer will refuse a claim.
- The deductible. How much will you need to pay for your deductible when filing a claim? It’s also worth checking to see whether you can adjust your deductible in exchange for a higher or lower premium.
- Additional options. Check to see what additional options you can include in your coverage. For example, can you add extra coverage for windshields or roadside assistance?
- Claims process. Remember to investigate the claims-handling process of each insurer. Check out what you need to do to file a claim, how and during which hours you can contact an agent and how quickly claims are processed.
Buying car insurance when you’re under 21 can be expensive, since insurers will take your young age and lack of driving history into account when calculating your premium. The good news is there are several things you can do to reduce the cost of your premium.
- Complete an advanced driving course. Some insurers will offer discounted premiums to young drivers who complete a course in advanced driving skills and road safety.
- Choose a lower level of coverage. The premiums of a comprehensive policy will always be more than those of a third party property or liability policy. Minimizing the amount of extra features you add to your policy will also keep costs down.
- Choose a higher deductible. Most insurers should allow you to choose the deductible that you must pay when you make a claim. A higher excess will result in cheaper premiums.
- Protect your car. Vehicles fitted with safety features like traction control and anti-theft devices are usually cheaper to insure than cars that don’t have these features. Cars kept in locked garages are also cheaper to cover than those parked on the street.
- Maintain a clean driving record. Because insurers consider your driving history when calculating your premiums, being a good driver and avoiding speeding fines and other infringements will help keep the cost of coverage down.
- Pay annually. Some insurers charge higher premiums if you pay for coverage monthly rather than annually.
- Buy online. Many insurers offer premium discounts if you purchase your policy online rather than over the phone.
- Take advantage of discounts. You may be able to take advantage of discounts offered by your insurer, for example, if you insure more than one vehicle or if you bundle other types of insurance with the same company.
- Compare policies. This is the easiest way to save money on under-21 car insurance. By comparing the benefits, features and limits of a range of different policies, you could save yourself hundreds of dollars.
There are a few issues to be aware of when purchasing when you are under 21, including:
- Not comparing your options. It’s vital to compare multiple car insurance policies before you purchase coverage. Not only will this help you find affordable coverage, but it will also help you choose a policy that matches your needs.
- Paying monthly. Many insurers will charge you extra if you decide to pay your premium in monthly instalments. If this is the case, either pay annually or find an insurer that doesn’t charge extra for paying monthly.
- Ignoring the deductible. If a car insurance quote seems too good to be true, it most likely is. A cheap policy may save you money on premiums but then hit you with a huge deductible when you make a claim.
- Fronting. To avoid the high premiums imposed on young drivers, some people will falsely list a parent or other older person as the main driver. This is called “fronting.” It’s illegal and could lead to your claim being refused.
- Not reviewing your policy. While it’s easy to simply renew your coverage with the same insurer when the time comes each year, shopping around can save you a whole lot of money. Car insurers often don’t reward their customers for loyalty, so regularly review the coverage offered by your current insurer and obtain quotes to see if you might be able to find a better deal elsewhere.
While finding car insurance as a young driver can be difficult, it’s still possible to find an affordable policy that meets all your coverage needs. Compare car insurance policies to find the perfect coverage for your set of wheels.