How can I get affordable car insurance if I’m under 25?
Drivers under 25 tend to pay more for car insurance than older drivers, but that doesn’t mean finding affordable coverage is impossible. By following a few steps and making sure you stay on top of your insurance policy, getting coverage that fits your budget becomes a lot easier.
This guide explains how to make it happen, what kind of car insurance options are available to you and everything you need to know about finding car insurance if you are under 25, no matter what kind of car you’re driving.
Compare car insurance policies for drivers under 25
Car insurance quotes for drivers under 25
Comparing car insurance quotes can be difficult, especially since every driver will get a unique quote based on their driving history, vehicle and state. To get an idea of how wildly quotes can vary, compare sample quotes for a driver living in New York who’s 23 years old, has good credit and wants premium coverage for his 2017 Toyota Camry.
|Company||Average annual rate||Learn more|
|State Farm||$2,957||Read review|
No matter how old you are, there are different types of car insurance coverages, and one of them, liability coverage, is mandatory in most US states. Liability covers bodily damage and property damage to the other driver and passengers if you’re found to be at fault in an accident. However, liability does not cover damages to your own car nor the cost of your own injuries. Coverage for damage to your own car falls under collision.
The other two main categories include comprehensive — which covers damage to your car caused by things other than a car crash, like, vandalism, theft or fire — and uninsured/underinsured. Uninsured/underinsured covers bodily injury and property damage to you if you are hit by a driver who does not have insurance or who doesn’t have enough insurance to cover the costs of damages.
It is usually wise to add additional coverage on top of the minimum liability coverage, depending on your price range and coverage needs.
|Coverage||Injuries to you||Injuries to others||Damage to your car from an accident||Damage to other cars or property||Damage to your car from theft or fire|
Now that you know what you’re looking for, you need to know how to find the policy that’s right for you. Here are the important things to look for and what they mean.
- Coverage. This refers to what is covered by a particular insurance policy, or, in other words, what the insurance policy will provide you with financial compensation for. For example, a third party damage policy will only provide you with financial compensation if you have to pay for the repairs of someone else’s property, while a comprehensive policy will do this as well as pay out in the event of certain damage to your car.
- Limits. Limits are the maximum amount something is covered for. For example, you might get car insurance that covers you for up to $5,000 worth of accidental damage. This means the insurance company will pay for up to $5,000 of repairs, but not more
- Exclusions. These are the conditions under which the insurance company won’t pay out. For example, you might be covered for car theft, with an exclusion for unlocked vehicles. This means you can make a claim if your car is stolen, but if it was unlocked at the time of theft the insurance company won’t pay out.
- Deductible. These are flat fees you must pay when making a claim. You can choose a higher deductible for lower premiums, or a lower amount for higher premiums.
- Premiums. This is the main cost of your car insurance policy. The premium is the regular, ongoing amount you pay to have an active policy. It can usually be paid either monthly or yearly.
- Fees. These are additional costs you must pay on top of your premium. Your policy may require you to pay administration fees, cancellation fees, support fees and, of course, deductibles.
Discounts for drivers under 25
If you’re under 25 and just finished school, you’ve probably lost your student discount. But there are many more discounts available from most car insurance providers you can probably qualify for.
- Buy online. Get up to 20% off for getting an online quote or signing up for your new policy online.
- Multi-car discount. If you have more than one driver in your home, you can save money by putting all drivers on the same policy.
- Bundling discount. Save 10-15% by combining insurance policies with the same provider.
- Accident-free discount. The longer you go without getting into an accident, the lower your premium.
- Safe driver discount. If you have a good driving history, you can be rewarded with a discount.
- Paid in full discount. If you are financially able to pay for your policy in full, you are likely to get a discount.
- Anti-theft discount. Anti-theft devices will help to lower your insurance premium.
- Usage-based discount. Only pay for how well and how much you drive with programs like Progressive’s Snapshot or Esurance’s DriveSense.
- No-claims discount. This perk gradually reduce premiums for each year you go without making a claim.
While insurance for drivers under 25 can be more expensive than it is for older drivers, there are ways you can reduce the cost of your premiums. These include:
- Buy a smaller, less expensive car, rather than a sports model or highly modified vehicle. If finding the cheapest car insurance is your number one priority, then this is your number one tip.
- Resist the urge to make claims just because you can. It might save you money in the short term, but it will wipe out any no claims bonus you may have and mark you as a risky driver, which increases your premiums.
- Consider increasing your deductible to reduce your premium, but make sure you can afford it if you have to make a claim.
- Restrict the number of people who can drive your car, and preferably limit it to those who are over 25, with the exception of yourself.
- Park in a garage, not on the street, and add security such as an alarm, tracking device or antitheft device for lower premiums.
- If you don’t plan to drive a lot, look for a pay as you drive insurance policy.
- Monitor your credit. Most insurers consider your credit score when setting your premium.
Understand car insurance terms: A-Z glossary After finding several policies that suit you, it’s time to compare prices by getting quotes. Remember that your goal is to find the car insurance that’s right for you. This might not always be the cheapest.
Choosing a policy
After finding several policies that suit you, it’s time to compare prices by getting quotes. Remember that your goal is to find the car insurance that’s right for you. This might not always be the cheapest.
When you buy your vehicle from a car dealer, the car insurance you take out will depend on the value of the vehicle and the requirements of your loan provider, if applicable.
Under 25 car insurance for cheap cars
A cheaper car might not need as much coverage as a more expensive or newer car.
If you have a used car or an older model and your car’s market value is only a few thousand dollars, you could choose to only take out third party property insurance or collision coverage. That way you’re financially covered in case of a major accident, but you’re not paying more in annual insurance premiums than your car’s worth.
You might not need comprehensive coverage, which covers events like theft, natural disasters, especially if the deductible is higher than your car is worth.
Under 25 car insurance for expensive cars
If you took out a loan to purchase the car, many lenders — including car dealer finance companies — will require that drivers under 25 years old take out comprehensive car insurance as a condition of their loan. This can be expensive, but your lender may insist on it. While they can require you to get comprehensive insurance, they can’t tell you which insurer to get it from, so you should always shop around for a deal.
One of the most effective ways to keep the cost of car insurance down is to drive an inexpensive vehicle, or drive your current car as long as safely possible.
Should I buy my car privately?
Buying a vehicle privately involves a certain level of risk. Not only does the car not come with a warranty of any kind, but its history is often unknown.
- Do a lien history check using your vehicle’s VIN (Vehicle Identification Number) on any vehicle you are looking to buy privately. This will tell you if the vehicle has any outstanding debt on it. You can do a lien check either through your local department of motor vehicle services (DMV) or a private organization.
- Have it checked over by a mechanic prior to purchase. Make sure you have insurance coverage before signing anything so you’re covered before you drive it away.
- As with buying from a dealer, whether you choose third party damage or comprehensive coverage will depend on your finances, the value of the vehicle and the requirements of your loan provider if you’ve taken out a loan.
Factors that affect the cost of insurance
Insurance providers consider many variables when determining the cost of insurance — some you might not be aware of. Keep these things in mind when selecting car insurance:
- Your car. An expensive car is also expensive for an insurance provider to repair or replace, which means higher premiums for you. As well, a high-performance car or off-road vehicle will also bring higher premiums.
- Credit score. Drivers with poor credit signal to insurance companies that you are a higher risk to insure. The risk is then passed on to you with a higher premium. Consider improving your credit score to lessen the cost of insurance.
- Age. Although there’s nothing you can do about your age, this is a factor in determining the cost of insurance.
- Gender. Again, although out of your control, insurance providers tend to view young male drivers as riskier to insure.
- Location. The cost of insurance is highly influenced by your location. Different states have different insurance regulations, which will partly determine your premium.
- Driving record. It probably goes without saying, but your driving record, including any previous accidents, will be taken into consideration when setting the price of your insurance.
- Do tell your insurer if your circumstances change, or they might use this as a reason to refuse to pay a claim later.
- Do add a second responsible driver to your policy if you have one, as this may help reduce your premium.
- Do drive safely at all times. A consistently safe driving record will help your No Claim and Safe Driver bonuses and decrease the cost of your premiums.
- Don’t lie to or mislead your insurer. Your insurance could be voided if the truth is discovered.
- Don’t nominate an older driver as the first driver if it is your car. That would be deceptive.
- Don’t modify your car without telling your insurer. Even then it’s best to stick with legal modifications that they approve of (a sunroof rather than a spoiler or sports exhaust, for example) or you can expect raised premiums.
Compare car insurance policies for under-25 drivers
When it comes to car insurance, being under 25 isn’t great. Fortunately, there are ways to pay less for coverage. Using online research and car insurance comparisons, you can reduce your premiums considerably and find the right insurance for your car.