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Best Car Insurance for Young Drivers

Here’s how new drivers can purchase automotive insurance that affords quality protection.

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BYRyan Tronier/ LAST UPDATED ON May 16, 2022
Best Car Insurance for Young Drivers

Young adults have a lot of expenses. Groceries, education, rent, and a social life all add up. One of the more costly of these expenses might be car insurance, but it doesn’t have to be. While they may not suffer the high premiums that teens do, motorists between the ages of 20 and 25 still pay dearly for the best car insurance for young drivers. But by purchasing insurance coverage from the right provider for your situation, you can significantly discount the premium. 

Some carriers have uniquely low-cost coverage for students still living at home, while others are better suited for young adults who are out of the nest. This is why it's important to shop around to find the least-expensive policy that does not compromise on coverage. Keep reading to discover how to save money on your premiums and which companies offer the best car insurance for young drivers.

This article may include references to products or services where The Drive has an affiliate relationship with the providing company. The Drive and its partners may earn a commission if you purchase a product through one of our links. Read more.

Best Car Insurance for Young Drivers

Best on a Budget: Geico

Best for Those Living at Home: Auto Owners

Best for Those on Their Own: State Farm

Best for Discounts: Progressive

Best for Accident Forgiveness: Nationwide

Best for Military Families: USAA

Our Methodology

To choose the best companies and products for this list, I looked at a large number of financial products from various providers. I focused on cost, product features and options, ease of use, customer service, and past customer ratings as the most important factors in the ratings.

Best on a Budget: Geico

Pros

  • Low-cost coverage
  • Savings with multiple discounts
  • Quotes available online, by phone, and in person

Cons

  • Has complaints listed with NAIC

Young drivers who are looking to save money on their car insurance may want to consider Geico. According to data from the car insurance marketplace QuoteWizard, Geico routinely delivers some of the lowest rates to young people, ages 20 to 25, in all 50 states. 

While the initial cost of your policy will be determined by a number of factors, Geico also offers discounts to help save even more money. Young drivers who are accident-free for at least five years will pay less, as will those who buckle their seatbelts. Your vehicle’s safety features can earn big discounts as well. If your car has airbags, anti-lock brakes, an anti-theft system, daytime running lights, or is less than three years old, Geico will further discount the cost of your policy.

Geico’s liability coverage includes the standard bodily injury and property damage protections in case you’re at fault in a car crash. For those who need full coverage, Geico also offers medical payments and personal injury protection (PIP) to pay for any medical expenses, collision and comprehensive to pay for vehicle damages, and underinsured/uninsured motorists for when the at-fault driver is insufficiently insured.

Geico ranks highly for customer satisfaction in J.D. Power surveys, but it has few customer complaints, according to the National Association of Insurance Commissioners (NAIC).

Best for Those Living at Home: Auto-Owners Insurance

Pros

  • Savings on multi-policy discounts
  • Gap coverage and available

Cons

  • No accident forgiveness
  • Not in every state

Parents who are adding a young adult to their policies may find a reason to bring all of their insurance needs to Auto-Owners Insurance. This underwriter offers bundling discounts for home, auto, and life, as well as distinctive coverage options that help households save money.

It’s no shock that young people living with their parents have fewer bills than their peers. But many are pleasantly surprised when discovering that they also enjoy less expensive car insurance rates. All providers offer some form of bundled insurance package that lowers the cost of the primary policyholder’s premiums when they add a teen or a young driver. 

What makes Auto-Owners stand out are the discounts it provides to parents who are adding a young adult to their household policy. These savings become even more notable when bundling automotive with life and homeowners insurance. In fact, its common-loss deductible covers your home and automobile in the event both are damaged in the same disaster, such as a storm or flood. Auto-Owners will subtract the amount of your property deductible from your automotive deductible, reducing your out-of-pocket expenses.

Besides the usual lineup of coverages that you expect from a carrier, this underwriter also provides access to unique programs such as its Collision Coverage Advantage, which waives your deductible if you get into an accident with another Auto-Owners policyholder. 

Those who manage their accounts well will also save money when paying in full as well as making on-time payments and enrolling in paperless billing. Auto Owners Insurance receives above average marks for customer satisfaction in some regions, and the NAIC shows fewer than average complaints in 2021.

Best for Those on Their Own: State Farm

Pros

  • Discounts for young drivers
  • Savings with multiple discounts
  • Nationwide network of agents

Cons

  • Gap coverage, accident forgiveness unavailable
  • Not all discounts available in all states
  • Coverage not available in all states
  • Higher than average record of complaints

Young drivers who have left the nest have a lot to like about State Farm. In addition to affordable coverage options and discounts that reward safe driving, this provider offers special programs for motorists less than 25 years old.

Young adults can save with State Farm’s Steer Clear program, which gives 15 percent off to those less than 25 years old, provided they have no at-fault accidents or moving violations for the past three years. Furthermore, young policyholders who take advantage of the carrier’s Drive Safe & Save program can discount their premiums even more. Using a mobile app, State Farm will monitor your driving activity, such as speed and cornering, and then discount your policy up to 30 percent when you drive responsibly during each policy cycle. 

Reducing risk is a hallmark of State Farm’s mission, and it offers discounts for taking an approved driver-safety course and having an anti-theft device installed. It’s these money-saving opportunities that make this underwriter appealing to young drivers who are on their own and are no longer insured by their parents. 

Although State Farm gets top marks in J.D. Power’s recent customer satisfaction study, it does have a higher-than-average number of complaints filed with the NAIC.

Best for Discounts: Progressive

Pros

  • Usage-based insurance available
  • Savings with multiple discounts
  • Coverage available in all 50 states
  • Quotes available online, by phone, and in person

Cons

  • Not all discounts available in all states
  • Premiums higher depending on how you buy

Young people who are on the hunt for cheap car insurance may find what they’re looking for with Progressive. While homeowners and policy bundlers often save more with this nationwide carrier, Progressive’s unique programs and discounts may save young drivers a bundle of their own.

Progressive has a reputation for providing affordable car insurance, but many of its low rates go to households that can bundle auto, life, and homeowners policies. Young drivers generally don’t carry this type of insurance, so they won’t have access to bundled policy savings. Still, with Progressive’s cornucopia of general discounts, young people may end up saving a substantial amount of money. 

Progressive will discount the premiums of policyholders who obtain both a quote and buy a policy online. In addition to standard loyalty and good-driver discounts, you’ll also save for going paperless, paying your premium in full, and signing up for automatic payments. Progressive also features a generous 10 percent discount just for students who maintain a B average or better at school.

Young motorists can also lower their car insurance costs by participating in Progressive’s usage-based insurance, Snapshot. This program uses an app to monitor your driving behavior, and it bases your premium on how safely and how frequently you drive. And, you guessed it, Snapshot comes with a discount too. Progressive claims the average customer saves $156 each year.

Progressive also boasts above average rankings for customer satisfaction in J.D. Power surveys, and it has fewer complaints than even Geico, according to the NAIC

Best for Accident Forgiveness: Nationwide

Pros

  • Usage-based insurance available
  • Flexible accident forgiveness coverage
  • Gap coverage and vanishing deductible available

Cons

  • Lower than average customer satisfaction rating

Those who prioritize long-term value in an insurance policy are probably in the market for a carrier that offers a flexible accident forgiveness policy. If so, Nationwide may offer the coverage that you’re hoping for, at the right price.

Young drivers statistically have a greater probability of getting into an auto accident, and Nationwide understands this. It’s why the provider’s optional accident forgiveness insurance erases a driver’s first at-fault accident, helping them to avoid costly rate increases. Not all underwriters provide this type of coverage, and those that do will often lump it into an expensive package. But Nationwide’s can be purchased as a stand-alone add-on by policyholders who have been insured with the company for six continuous months.

In addition to forgiving a young adult’s first at-fault accident, this coverage will also forgive two minor violations per policy and all fender bender claims of less than $1,500. It's good for motorists with increased risk due to heavy traffic congestion and long commutes to work and school.

Nationwide’s usage-based insurance program, SmartMiles, bases your monthly payment on your driving habits and frequency. This could be ideal for young people who don’t drive often or very far, but still need to keep a car insured.

Nationwide doesn’t rank as well for customer satisfaction as the others on this list, but it still makes J.D. Power and Associates Top 20. On the bright side, this provider has fewer complaints filed with the NAIC than most other insurance companies.

Best for Military Families: USAA

Pros

  • Low-cost coverage
  • Coverage available to children, spouses, and former spouses of military service personnel 
  • Coverage available in all 50 states

Cons

  • Coverage not available to general public

While the general public isn’t eligible for USAA car insurance, young drivers who are active-duty military — or whose parents are servicemembers or veterans — may find the cheapest insurance rates with this government-backed underwriter.

Founded in 1922, the United States Automobile Association (USAA) is a military-only carrier that offers low-cost coverage exclusively to those within the military community and their families. It’s one of the many benefits the U.S. extends to those who honorably serve their country.

Eligible young people will likely find the most affordable coverage through USAA. In addition to below-market rates, it offers a discount for good grades and savings to drivers who complete an approved defensive-driving course. There’s also a basket of vehicle discounts for anti-theft device installation, low annual mileage, and savings for cars that are less than three years old. 

Military personnel who are on active duty can save even more when they garage their cars on a military installation and/or store them during deployment.

USAA provides much of the same coverage that other underwriters do, with additional policy options for roadside assistance and rental reimbursement. The carrier also has ride-hailing insurance for young drivers who work with Uber and Lyft. 
USAA boasts the top spot for customer satisfaction in J.D. Power’s 2021 Customer Satisfaction Index.

Average Cost of Insurance for Young Drivers

The average cost of car insurance for young drivers is about $3,396 annually ($283 per month) for full coverage and about half that for minimum liability. In contrast, a 40-year-old driver will pay an average of $2,064 per year ($172 monthly) for similar coverage.

These average costs are based on findings from the independent insurance marketplace QuoteWizard, which examined auto insurance rates from a dozen underwriters in all 50 states. The study’s more granular data reveals that a 20-year-old driver will pay an average of $364 per month for full coverage and about $86 per month for minimum liability. At the other end of this age spectrum, 25-year-old drivers will pay about $202 per month for full coverage. 

How to Save on Insurance

Even though policyholders between the age of 20 to 25 will pay more, there are proven ways to save money on car insurance.

Stay on Your Parent’s Policy

If you’re looking for the cheapest car insurance, staying on your parent’s policy can cut your costs in half. Each provider will have its own terms and conditions, but those who still live with their parents as a primary residence or attend school full-time can typically remain on the family car insurance policy indefinitely. Since there are no age restrictions, this money-saving strategy works for anybody who has returned to the nest.

Compare Car Insurance Quotes

The first rule of saving money is to comparison shop. Whether you’re in the market for a new car or a 12-pack of soda, this tried-and-true principle will always help you find the lowest price. Request quotes from at least three, preferably five, auto insurance companies and compare their pricing and coverage before making a decision. It takes some time, but your bank account will be glad that you did.

Maintain a Clean Driving Record

Not only does a good driving history make you eligible for policy discounts, but insurers also use your record to determine the likelihood that you’ll be involved in an accident. Speeding tickets, moving violations, and license suspensions will all signal to your insurance company that you’re a high-risk motorist. Yet, those with records that demonstrate a history of safe driving can save hundreds of dollars over the life of their policy.

Drive a ‘Safe’ Vehicle

Most carriers award lower policy rates to vehicles they regard as being “safer.” Each insurance company has its own criteria for which vehicles are deemed to be safe, but common examples include Honda Civics, Nissan Rogues, and Toyota Corollas. Check with your provider to see what types of price breaks it offers.

Wait Until You’re Older

For the most part, car insurance costs begin dropping around age 25. If you live in a metro area and have access to reliable public transportation, then waiting until you’re a bit older to operate and insure your own vehicle can be a sound decision — especially when you put all of the money that you would have spent on car payments, fuel, and monthly premiums into a high-yield savings account.

Take Advantage of Policy Discounts

When comparing quotes, remember that you don’t always have to settle for the sticker price of a car insurance policy. Choose an underwriter that provides a lineup of discounts that you can potentially take advantage of both today and down the road. 

Discounts are policy price reductions that carriers offer to incentivize customer loyalty and safe driving. In some instances, you can save hundreds on your annual premiums. 

Discounts to Look For

When you’re looking to lower your car insurance rates, discounts are a valuable money-saving opportunity. Some insurance discounts for young drivers are available for students, while others reward good driving habits and practical account management.

  • Auto pay: When you enroll in automatic payment, not only will you never miss a monthly premium, but you’ll likely get a discount from your insurer.
  • Paperless: While it’s not much of a discount, many policyholders can save a couple bucks by opting out of snail mail and consenting to digital communication and documentation.
  • Pay in full: Many providers incentivize paying for your policy in full rather than spreading the premium out month to month.
  • Good student: College students who meet a provider’s criteria for good grades are often eligible for savings. The threshold varies, but you’ll typically find a B average will qualify.
  • Defensive driver training: Regardless of whether your state mandates this training during driver education, young drivers who complete an approved course often save money on their premiums.
  • Accident free: Those with good driving records are usually rewarded with a discount. It’s a good incentive to ease up on the gas pedal and put the phone away.
  • Multiple policy: Young drivers who also carry renters insurance or another eligible policy may be able to save by bundling all of their policies with one insurer.

Essential Cost Variables for Insurance

As with everything, there are a host of variables that will affect the cost of your insurance as no two people are exactly alike. With that in mind, here are the variables that’ll change the cost of your insurance. 

Age

Because motorists with less driving experience are at greater risk of causing accidents, young drivers will generally pay more for car insurance than their parents do. However, Hawaii and Massachusetts have legislation in place to prevent underwriters using age as a cost variable for car insurance. 

Gender

Males will often pay more for insurance than their female counterparts. Multiple studies, including research from Insurance Institute for Highway Safety (IIHS), show that men are statistically more likely to cause accidents, regardless of age. Several states — including California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania — do not permit the use of gender as a cost variable for insurance. 

Credit Score

Insurance carriers routinely use credit scores to determine the probability that a driver will file a claim. Those with higher scores are considered less likely, while those with lower credit are regarded as more likely. As a result, drivers with good credit will usually pay less for car insurance. Again, several states — including California, Hawaii, Massachusetts and Michigan — have banned providers from using credit scores as an insurance cost variable.

Location

Insurance companies charge higher rates to drivers who live in ZIP codes that are more susceptible to theft or damage caused by vandalism, collisions, and natural disasters. Additionally, each state has its own insurance laws that will affect your premiums. You’ll also pay more for coverage when you drive frequently. So, if you’re commuting daily from one ZIP code to the next, expect slightly higher rates. 

Vehicle/Model

Some cars are more expensive to insure than others. Carriers often charge lower rates for vehicles that are proven to be safer and more durable in an accident. As an example, sport utility vehicles, such as the Subaru Outback and Honda CR-V, are among the cheapest cars to insure.

Type of Coverage

Most states require basic liability as the bare minimum insurance to legally operate a vehicle. You’ll most likely benefit from additional coverage, but it will cost you. SImilarly, the deductible and policy limits for your selected coverages will also impact the price you’ll pay.

Car insurance providers offer a variety of protections for motorists. These are the most common to look for:

  • Bodily injury and property damage liability: Covers the other person’s medical costs and damages when you cause an accident
  • Collision: Covers your own vehicle’s damage, regardless of fault
  • Comprehensive: Covers non-accident damages, regardless of fault
  • Personal injury protection/medical payments: Covers your own medical care
  • Uninsured/underinsured motorist: Covers your medical and damages when the at-fault driver doesn’t have adequate coverage
  • Guaranteed asset protection: Pays your auto loan if your car is totaled or stolen and you owe more than it's worth

FAQs

You’ve got questions. The Drive has answers.

Q. What age is a young driver?

A. Insurance companies typically define young drivers as being between the ages of 20 to 25, while teen drivers range between 16 to 19 years old. This distinction may seem like splitting hairs to some, but these separate categories highlight the differences between car insurance rates for young adult drivers and teen drivers.

Teens generally pay the most for car insurance, based on their age and lack of driving history. In contrast, young drivers often have a few more years of driving experience under their belts, own their own cars, and use them for commuting to work or university. Hence, while young adults still pay significantly more for car insurance than their parents and grandparents, they pay lower insurance premiums than teens.

Q. Why is car insurance so high for people younger than 25 years old?

A. Young people and teens pay more for car insurance because they’re more likely to be involved in a traffic accident than drivers older than 25. Not only do younger drivers cause more accidents than other age groups, the severity of those car crashes are likely to cause more damage and fatalities, according to the National Highway Traffic Safety Administration (NHTSA).

In fact, a recent study by the NHTSA found that “although young drivers represented only 5.4 percent of all licensed drivers in 2016, they represented 8.9 percent of drivers in fatal crashes.” The study’s findings make a compelling case for the increased risk of insuring young drivers and teens.

25 percent had been involved in one or more crashes
55 percent reported driving faster than most other vehicles 
47 percent reported being involved in one or more near misses
51 percent admitted to drinking and then driving

The good news is that as young drivers mature, the less risk they pose on the road. This is why most younger drivers see a steep drop in their car insurance rates around the age of 25, provided they maintain a clean driving record.

Q. What is the cheapest car insurance for young drivers?

A. Geico generally offers the cheapest car insurance to young drivers in all 50 states. Keep in mind that some regional providers — such as Erie and Country Financial — often provide even lower car insurance rates than Geico to drivers between the ages of 20 and 25. But these carriers only operate in select states (12 versus 19 states, respectively). You may have a nearby local provider that features more competitive premiums.

Although data from QuoteWizard shows Geico to have the lowest rates nationwide, the rate you will get depends on a number of factors, including your driving record, location, credit score, and your ability to leverage a provider’s discounts. In other words, if you’re looking for cheap car insurance for young drivers, shop around with multiple underwriters. It’s an accepted best practice to get insurance rate quotes from three to five carriers before making a decision.

Q. How much coverage do young drivers need?

A. Every state except New Hampshire requires all drivers to carry liability insurance to legally operate a motor vehicle. Bear in mind that each state has its own laws around what liability insurance will entail. Yours may only require bodily injury liability and property damage liability to cover any medical costs or vehicle damage you cause when at-fault in a crash. Other states may want you to also carry PIP or uninsured/underinsured motorists insurance.

Still, in most states, the required coverage all drivers need ranges between $15,000 and $25,000 of bodily injury liability and between $10,000 and $25,000 in property damage liability insurance. In many cases, these state requirements are lower than the coverage you’ll actually need to protect yourself should you be involved in an accident. Many insurance providers recommend drivers have at least 100/300/100 coverage. That’s $100,000 per person, $300,000 per accident in bodily injury, and $100,000 per accident in property damage liability. However, those who are on a budget should understand that policies with higher limits will cost more money.

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