Car Insurance for 25-Year-Olds | Bankrate (2024)

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Updated Apr 18, 2024

Key takeaways

• Full coverage car insurance for 25 year olds is $2,854 per year on average, 23 percent higher than the national average annual premium of $2,314.
• Minimum coverage is $782 per year for 25 year olds on average — 21 percent more than the national average of $644 per year.
• Rates typically start to decrease with age and accumulated driving experience, with the first notable decline usually happening at age 25, though the decrease may not be immediate and is contingent on a number of individual factors.
• Other avenues to potentially cut down on car insurance expenses include exploring different providers, scrutinizing available discounts and more.

According to data sourced from Quadrant Information Services as of April 2024, the average cost for full coverage car insurance premiums for 25 year olds is $2,854 per year, which is a fair amount higher than the overall average annual full coverage premium for 40-year-old drivers of $2,314 per year. Premiums for minimum coverage cost an average of $782 per year for 25 year olds, while the national average is $644 per year.

At 25 years old, you most likely have more experience behind the wheel than teen drivers and as a result, pay lower average rates than when you were younger. However, you likely still have significantly less experience than a 40-year-old driver. While your rates should continue to decrease as you age until your 70s, you may still pay higher-than-average premiums for several years. Your driving record is another key factor in determining your auto insurance rates. Speeding tickets, at-fault accidents and other moving violations may negate age-related premium reductions.

Does car insurance go down at 25?

Although 25-year-olds tend to pay higher premiums than 40- and 50-year-old drivers, you can usually expect lower average premiums than teens and younger adults. Generally, you’ll see a drop in premium at the first renewal after you turn 25. Your policy renewal is the end of your policy term and the start of a new term. This means that, unless your renewal date falls on your birthday, you may have to wait a bit to see the savings. Keep in mind, too, that numerous factors impact premiums, so your own premium might not change much or could even increase, depending on your unique situation.

On average, 24-year-olds pay $3,252 per year for premiums for full coverage car insurance and $885 per year for minimum coverage. By contrast, 24-year-olds pay 14 percent more per year for full coverage and 13 percent more per year for minimum coverage. While 25-year-olds still pay more than the overall national average, most see a decline in cost from previous years.

How much do rates decrease for 25-year-olds in each state?

In addition to your age, where you live may have a significant impact on how much you pay for car insurance. In Hawaii and Massachusetts, auto insurance companies are not allowed to consider your age as a rating factor, but carriers in Massachusetts are allowed to consider how many years you have been a licensed driver. Louisiana and Florida have some of the highest average full coverage rates for 25-year-old drivers, while Hawaii and North Carolina have some of the lowest.

The national average full coverage premium for 24-year-old drivers on their own policy is $3,252 annually, with a minimum coverage policy averaging $885. Considering the national average rates for a 25-year-old driver — $2,854 for full coverage and $782 for minimum — the average premium difference you might see between birthdays is $398 or $103 per year, respectively, depending on which type of insurance you have (and any other factors that might affect your actual rate). Note that you will likely not see your rate adjust until your policy renews.

However, how much your rate decreases between 24 and 25 (if it does at all) depends on a number of factors, including the state you live in. Drivers in Wyoming and Montana might see the most significant savings at 21 percent and 20 percent, respectively. North Carolina and California residents typically experience the smallest reduction at 2 percent and 6 percent, respectively. Note that these figures do not include states that prohibit insurers from using age as a rating factor (Hawaii and Massachusetts).

The rates below are for 24-year-old drivers and 25-year-old drivers on their own policy.

Average cost of car insurance for males vs. females at age 25

Most states take gender into consideration when rating policies. Males tend to engage in riskier driving behavior than females, which may lead to more frequent or serious accidents. Because of this, the average male driver tends to have higher premiums than the average female driver — particularly in their teens and 20s. This difference may not be relevant in states that do not allow gender as an insurance rating factor. These include California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania.

Cheapest car insurance companies for 25-year-olds

Although you will likely pay less for insurance than you did when you were a teen or in your early 20s, budget may still be a primary concern for you in your mid-20s. Many drivers in this age group are starting new jobs, moving out of their parents’ homes and may be purchasing their own car insurance policy for the first time. If securing cheap car insurance is your goal, Bankrate’s research may be able to help you find coverage that fits your budget.

Our insurance editorial team obtained premium information from car insurance companies that write policies in most states from Quadrant Information Services. The rates below represent the average full and minimum coverage rates of a 25-year-old driver who rents their home. While these rates can give you a broad sense of what people your age are paying across the country, if you are looking for the cheapest car insurance for 25-year-old drivers, you may want to check our selections (updated monthly) from your specific state to narrow down your search.

How to save on car insurance for 25-year-olds

Car insurance may be more expensive than average when you are 25, but there are still ways to potentially save. Following the steps listed below might help you find the coverage you need at a price that fits your budget.

Shop around

Insurance companies may weigh your personal rating factors differently, so it pays to shop around. For instance, one company might consider your occupation, whereas another company may not. Additionally, every driver has different preferences and needs when it comes to car insurance. Determining what you want, like certain coverage options or digital tools, could help you find the right company for you. Once you’ve nailed down the most appealing options, experts recommend comparing rates from at least three insurers for the same coverage to identify the best deal.

Compare discounts

Most auto insurance companies offer discounts, but some companies may have more discounts that apply to you. If you can take advantage of several, you may see significant savings. You can often research discounts on a company’s website, but you can also talk to a customer service representative or visit a local agency to discuss discount options and figure out if you qualify.

Some of the common discounts available for 25-years-olds include:

• Defensive driving: By taking a defensive driving or safe driving course, you might earn a discount from your insurance provider.
• Safety features: If your vehicle has certain safety features (or you add them), such as anti-lock brakes or an anti-theft device, it could help you save.
• Bundling: Many car insurance companies offer discounts for purchasing multiple policies from them, such as auto and home.
• Paperless: Some auto insurance companies provide discounts for paying your bill online or agreeing to receive electronic communications.

Increase your deductibles

Full coverage auto insurance policies have two deductibles, one for collision insurance coverage and one for comprehensive insurance coverage. Because collision claims tend to be more expensive, your collision deductible usually has more of an impact on your premium than your comprehensive deductible. Increasing one or both of your deductibles usually means you will pay a lower premium, but you will have more to pay out of pocket if you claim damage to your vehicle. Most insurance professionals advise choosing a deductible amount you can comfortably pay with no notice. Otherwise, you could put yourself in a financial bind if you cause an accident or need to make a comprehensive claim.

Reconsider the car you drive

Similar to how insurance companies rate each driver based on their individual rating factors, cars are also rated differently. Some cars may be cheaper to insure than others due to the price of parts and standard safety features. Before trading or selling your car, you may want to get an insurance quote for the car you plan to purchase.

Improve your credit score

Unless you live in California, Hawaii, Massachusetts or Michigan (where state law prohibits or limits the use of credit as a rating factor), your credit history can impact your car insurance premium. Drivers with worse credit are statistically more likely to file claims, so insurance companies charge a higher price to offset this risk. If you can improve your credit, you may see a reduction in your premium.

How to choose the best car insurance at age 25

The cheapest auto insurance may not be the best option for your needs. If you are in the market for a new car insurance policy, the following steps may help you determine the right coverage and company for you:

• Consider state minimum insurance requirements: In almost every state, you are required to carry a minimum level of car insurance to legally drive on public roads. However, opting for minimum coverage may leave you financially vulnerable if you’re at fault in an accident. For instance, if you hurt someone as an at-fault driver and your minimum bodily injury limits are exceeded, you may be liable to cover the rest of the injured party’s medical bills out of pocket. It can be tricky to strike a balance between affordability and protection, so you might find it helpful to consult with a licensed agent to discuss your options.
• Consider your personal insurance needs: In addition to state minimum requirements, you will likely have to carry comprehensive and collision coverage if you finance or lease your vehicle. Financing and leasing requirements aside, you might also want to carry emergency roadside assistance in case of a breakdown or gap insurance if you paid a smaller-than-average down payment on your new car.
• Compare companies and quotes: Getting quotes from several companies lets you compare prices, discounts, coverage options and customer service ratings. Most companies offer online quotes, but some may require you to get a quote in person or over the phone.
• Review third-party rankings: Companies like J.D. Power review overall customer satisfaction and claims satisfaction ratings of various insurance providers. AM Best reviews financial strength, which indicates a company’s historical ability to pay out claims. Reviewing these ratings and choosing a company that rates highly may help you feel comfortable with your insurance carrier.

If you are unsure where to start, guidance from a licensed insurance agent might be helpful. Insurance agents may be able to evaluate your situation and make recommendations for coverage options and policy features that fit your needs.

Frequently asked questions

Methodology

Bankrate utilizes Quadrant Information Services to analyze April 2024 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:

• $100,000 bodily injury liability per person
• $300,000 bodily injury liability per accident
• $50,000 property damage liability per accident
• $100,000 uninsured motorist bodily injury per person
• $300,000 uninsured motorist bodily injury per accident
• $500 collision deductible
• $500 comprehensive deductible

To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2022 Toyota Camry, commute five days a week and drive 12,000 miles annually.

These are sample rates and should only be used for comparative purposes.

Age: Rates were calculated by evaluating our base profile with the age 25 (base: 40 years) applied. Driver may be a renter or homeowner. Age is not a contributing rating factor in Hawaii and Massachusetts.

Gender: The following states do not use gender as a determining factor in calculating premiums: California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, Pennsylvania.

Bankrate Scores

Our 2024 Bankrate Score considers variables our insurance editorial team determined impacts policyholders’ experiences with an insurance company. These rating factors include a robust assessment of each company’s product availability, financial strength ratings, online capabilities and customer and claims support accessibility. Each factor was added to a category, and these categories were weighted in a tiered approach to analyze how companies perform in key customer-impacting categories.

Each category was assigned a metric to determine performance, and the weighted sum adds up to a company’s total Bankrate Score — out of 5 points. Our scoring model provides a comprehensive view, indicating when companies excel across several key areas and highlighting where they fall short.

• Cost & ratings50%

• Coverage & savings30%

• Support20%

• Tier 1 (Cost & ratings): To determine how well auto and home insurance companies satisfy these priorities, average quoted premiums from Quadrant Information Services (if available), as well as any of the latest third-party agency ratings from J.D. Power, AM Best, Demotech and the NAIC, were analyzed.
• Tier 2 (Coverage & savings): We assessed companies’ coverage options and availability to help policyholders find a provider that balances cost with coverage. Additionally, we evaluated each company’s discount options listed on its website.
• Tier 3 (Support): To encompass the many ways an auto insurance company can support policyholders, we analyzed avenues of customer accessibility along with community support. This analysis incorporated additional financial strength ratings from and Moody’s and factored a company’s corporate sustainability efforts.