The best car insurance for young drivers

As a young adult, you’re likely trying to balance your own budget for the first time. For many young people, finding affordable car insurance can be one of the hardest parts of this budget-balancing act. On average, drivers between the ages of 20 and 25 pay between $3,294 and $5,398 per year for car insurance. 

Shopping around for competitive quotes is the best way to fit car insurance into your budget as a young adult. As a starting point, Bankrate's insurance editorial team analyzed average premium data for drivers in their early 20s to find the most affordable providers for young adults. In addition to premium data from Quadrant Information Services, we took into account coverage options, available discounts and third-party ratings from J.D. Power and AM Best.

How much is car insurance for young drivers?

Young adults aged 20 to 25 pay between $3,294 and $5,398 per year, on average, for a standalone full-coverage auto insurance policy. For state minimum coverage, young adults pay between $985 and $1,657 per year, but experts typically recommend carrying more than minimum coverage.

While age and experience drive rates higher for young adults, other factors can influence how much you pay for coverage. Staying on a parent's policy is the easiest way to reduce the cost of car insurance for young adults. For instance, the average annual full coverage premium for a 21-year-old on their own policy is $4,500, compared to $3,705 on their parents’ policy. As long as your primary residence is the same as your parents' and any vehicle you drive is garaged there, you may be able to remain on the family policy.

Average car insurance costs for young drivers by state

Location is another critical factor in determining auto insurance premiums. Every state has different insurance laws, including different minimum coverage requirements, which can impact the rates set by every auto insurance company. Additionally, the risk of getting into an accident may vary by location, including your state, city or even ZIP code.

The table below illustrates the average annual full coverage premium for young adults, analyzed by state.

How are rates determined for young drivers?

Auto insurance rates for young adults are determined in the same way as they are for older drivers. Factors that influence car insurance premiums include:

• Driving experience: Typically, drivers who are 25 and younger pay more for car insurance because their lack of driving experience may put them at a greater risk for causing accidents than older drivers. They are also more likely to file a claim because they are typically not as established financially as older drivers. In Hawaii and Massachusetts state regulations restrict insurers using age as a rating factor, but most states look as years licensed as an indicator of driving experience.
• Vehicle make and model: Some cars are cheaper to insure than others. In general, affordable SUVs and crossovers with strong safety ratings will carry the lowest premiums, while luxury cars will come with higher insurance costs. Before buying a vehicle, getting a quote from your insurance carrier may be a good idea to make sure you can afford the coverage.
• Credit: Most states allow insurance carriers to use your credit-based insurance score when calculating your policy rate. People with poor credit typically pay much higher rates than consumers with good credit scores because actuarial data shows how a consumer handles their finances is a predictor of filing insurance claims. Regulations in California, Hawaii and Massachusetts ban the use of credit as a factor in determining auto insurance rates.
• Gender: Men usually pay higher rates for car insurance than women, even if they have clean driving records. Men — especially men in their twenties — are statistically more likely to get into accidents than women, and those accidents tend to be more severe. California, Hawaii, Massachusetts, Michigan, North Carolina and Pennsylvania ban the use of gender as a rating factor.
• Location: If you live in an area with a high likelihood of accidents or damage caused by natural disasters, theft or vandalism, you may pay more for coverage. Additionally, every state has different insurance laws, which can affect premiums.
• Mileage: The more you drive, the more likely you will have an accident due to being on the road more often. People who only use their cars occasionally may pay lower rates than people who are on the road more often.
• Coverage selections: If your car is financed or leased, you will need to carry comprehensive and collision coverage — a combination often called “full coverage” — to satisfy lender requirements. For some young adults, the cost of full coverage may be prohibitive. If you don't have an auto loan, you may want to reduce the types of coverage on your policy, but maintaining high liability limits is still typically worthwhile. 

Because these variables will change your premium from carrier to carrier, it can be helpful to compare rates from multiple providers before settling on an auto insurer.

Car insurance discounts for young drivers

Almost every auto insurance company offers discounts to drivers, and some even offer discounts specifically for young drivers. Finding a company that offers the right discounts for your driving habits may be the best way for young drivers to save on insurance.

• Good student discount: Most companies offer discounts for students who maintain a certain GPA or letter grade average. These student discounts are intended for full-time high school and college students and may save hundreds of dollars per year on insurance premiums.
• Young driver safety training: Many companies offer discounts to young drivers who have taken a driver education class or an approved driver training course. Most courses cover the rules of the road and teach young drivers to drive defensively.
• Usage-based discounts: Usage-based auto insurance is a relatively new way to potentially reduce your premium. Carriers that offer these telematics programs require policyholders to use a mobile app or plugin device that monitors driving habits like acceleration, braking, speed and trip distance.
• Distant student discount: Many auto insurers offer discounts for students who attend school away from home if they do not take a vehicle with them during the school term. You must be listed on your parents’ policy to take advantage of this discount.
• Billing discounts: If you enroll in auto-pay or paperless billing, most insurance companies will offer a small discount on your premium. You may also be eligible for a larger discount — typically around 10 percent — if you're able to pay your annual premium in full rather than in monthly installments.
• Multi-policy discount: For drivers who rent an apartment and own a car, bundling their auto and renters insurance can be one way to make both policies more affordable.
• Alumni association discounts: Many car insurance companies offer alumni association discounts for recent college graduates.

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