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 as an under 25 no matter what car you’re driving.
What's in this guide?
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 your 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 coverage and one of them, liability coverage, is mandatory in most US states. Liability coverage covers bodily damage and property damage if you’re found to be at-fault in an accident. What this means is that if you were found to be the cause of an accident, liability coverage doesn’t cover damages to your own car nor the cost of your own injuries.
You should also add additional coverage on top of the minimum liability coverage, depending on your price range and cover needs.Back to top
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, deductiblees.
- Discounts. There are many discounts available for most car insurance policies. Some of the most common are pay as you drive, which cuts prices if you don’t use your car a lot, multi-policy discounts, which are usually about 10-15% off premiums if you’ve taken out multiple insurance policies with the same provider, discounts of up to 20% for buying car insurance online and no claims discounts which gradually reduce premiums for each year you go without making a claim.
Choosing a policy
After finding several policies that suit you, it’s time to compare price 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.
- Use an online comparison site to compare quotes from a number of different insurers. Use these quotes to establish a ballpark price range for your insurance needs. If you receive a quote offering you a suspiciously good price, try to find out why and make sure it’s not missing something important.
- Always read the fine print in the Product Disclosure Statement (PDS) and understand the terms and conditions. Know what is included in and what is excluded from your coverage.
- Compare insurers as well as their policies. Research their reputation, their claims record and their level of customer service on their websites and social media platforms.
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.
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.
- Drive safely at all times, no matter the vehicle or the insurance, to enjoy safe driver discounts.
- 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.
- Package all your insurance with one provider to receive a multi-policy discount.
- Consider increasing your deductible to reduce your premium, but make sure it is not higher than you can afford 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.
- Insure your vehicle for the less expensive market value rather than the more expensive agreed value. This is not recommended for classic or modified cars, only more standard ones.
- Take a safe driving or defensive driving course. Insurers are willing to extend discounts to those who have completed them.
- If you don’t plan to drive a lot, look for a pay as you drive insurance policy.
- Buy your insurance online, as most insurers will give you a discount.
- 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
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.