Do Car Insurance Rates Drop at Age 25?

Last Updated on September 17, 2023

Insurance companies consider many factors when setting rates. Age is one of those factors. But do car insurance rates really drop at age 25?

As long as you maintain a clean driving history and have no major incidents, car insurance rates should drop throughout your early 20s, and many drivers get a significant drop at age 25.

Keep reading to find out everything you need to know about how car insurance rates drop with age, including how much you could save when turning 25.

Key Takeaways:

  • Car insurance rates generally drop with age, and the biggest drop occurs at age 25 when the average premium decreases by about 11%.
  • Different insurance companies have different discounts and policies for drivers at the age of 25, so it’s a good idea to compare quotes and shop around for the best deal.
  • Other factors besides age also affect car insurance rates, such as driving experience, state laws, driving history, credit score, ZIP code, and vehicle type.
  • Turning 25 also makes it cheaper and easier to rent a car, as many rental companies charge extra fees or avoid renting to drivers under 25.

The Average Car Insurance Policy Drops 11% at Age 25

Teenage drivers pay some of the highest rates in America for car insurance. As a 16-year-old to 19-year-old driver, you could pay thousands of dollars more per year for car insurance than the average driver.

Fortunately, rates continue to drop with every year of driving experience you attain. The longer you drive accident-free and avoid speeding tickets and other citations, the more you’ll save on car insurance each year.

Generally, you can expect car insurance premiums to drop around 10% per year during your teenage years and early 20s. According to our research, car insurance premiums drop around 11% at age 25.

According to our research, the average 24-year-old in the United States pays around $3,200 per year for car insurance. By the time you hit 25, you’re paying around $2,900 annually, or a drop of around 11%.

Different Companies Have Different Discounts at Age 25

The average car insurance company reduces premiums by around 11% at age 25. However, some insurers have steep discounts, while others hardly offer a discount at all.

Some insurers offer cheap rates on car insurance at all ages, for example, so you’re unlikely to see a sizable drop at age 25. Other insurers charge comparatively high rates to younger drivers before rewarding you with a significant drop at age 25.

USAA, for example, is known for offering affordable rates and good coverage to drivers of all ages. According to our research, USAA only drops rates 3% to 5% at age 25.

In comparison, companies like Liberty Mutual, State Farm, and Progressive tend to charge higher rates to younger drivers before offering a steep discount at age 25. These insurers may offer discounts of 10% to 15% or more to drivers age 25 and up.

Meanwhile, some insurers care about age much less than other factors. Some insurers put a heavy emphasis on your credit score and driving history, for example, instead of your age, which means your 25th birthday may not lead to lower rates.

Other Factors Impacting Premiums at Age 25

Some 25-year-olds pay $1,000 per year for full coverage car insurance. Others pay $5,000 per year. Insurers consider many factors when calculating rates, and age is just one of those factors.

Other factors impacting premiums at age 25 include:

Driving Experience: Some 25-year-olds have nine years of driving experience because they got their license when they turned 16. Depending on your state, you may have even received a learner’s permit at 14, giving you more driving experience. The earlier you get your license, the more driving experience you have. The more driving experience you have, the safer you tend to be, and the cheaper your insurance premiums will be. A 25-year-old driver with nine years of experience could pay thousands less per year than a driver who waited until 22 to receive a license.

State Insurance Laws: Different states have different insurance laws, which is why insurance premiums fluctuate wildly across the country. 25-year-old drivers in Idaho and Maine, for example, pay around $1,605 per year for full coverage car insurance. Meanwhile, 25-year-old drivers in Florida and Michigan pay over $3,400 per year for that same coverage. Some states have strict insurance laws and higher costs of doing business, leading to higher insurance premiums.

Driving History: Do you have years of safe driving history? Or do you have multiple at-fault accidents, speeding tickets, and other citations? These incidents can significantly impact your insurance premiums – especially as a driver around age 25. Younger drivers pay higher insurance premiums, and younger drivers with a problematic driving history pay even higher rates.

Credit History: Insurers in virtually every state use your credit score to calculate rates. The higher your credit score, the lower your risk of making a claim or causing a serious accident. Many 25-year-old drivers have average credit scores or worse. They may have student debt, low credit availability, and other factors lowering their score. All of these factors can raise insurance premiums. Three states ban the use of credit scores for all drivers, including California, Hawaii, and Massachusetts.

ZIP Code: Do you live in a ZIP code in the middle of a city with high traffic density? Or do you live in a rural area with a low crime rate and low population density? Your ZIP code can significantly affect insurance premiums as a driver under age 25.

Vehicle Type, Safety Rating, and Value: A 25-year-old driving a high-end sportscar will pay significantly more in insurance premiums than a 25-year-old driving a decade-old Honda Accord. Insurers consider vehicle type, value, safety rating, and other vehicle-specific factors when calculating rates.

Best Discounts for 25-Year-Old Drivers

As a 25-year-old driver, you’ll pay cheaper insurance rates than most drivers in their teens and early 20s. However, you can save even more money by shopping for discounts.

Here are the best discounts available for 25-year-old drivers:

  • Professional and academic organization discounts, including alumni discounts, professional association discounts, AAA membership discounts, and similar group affiliation discounts.
  • Accident-free or claim-free discounts.
  • Telematics or driver tracking program discounts.
  • Defensive driving course discounts.
  • Payment-related discounts, including paid-in-full discounts, electronic billing discounts, and automatic payment discounts.
  • Other discounts, including safety feature discounts, low mileage discounts, good grade students, student living away from home discounts, homeowner discounts, bundling discounts, and more.

Check Car Insurance Quotes After Turning Age 25

After you turn age 25, comparing car insurance quotes is a good idea. Many insurance experts recommend comparing quotes after all major life events – including your 25th birthday.

Some insurers avoid insuring younger drivers. They’re statistically risky to insure, so these insurers charge extremely high rates to drivers age 25 and comparatively cheap rates to drivers over 25.

Other insurers attract younger drivers with comparatively low rates, only to charge comparatively high rates to older drivers. These insurers assume you’ll stay loyal throughout your driving career, making it less likely to switch.

Whatever your situation or current insurer may be, it’s a good idea to compare rates after age 25.

Rental Cars Are Cheaper After Age 25

Your 25th birthday is a major milestone for car insurance purposes and rental car purposes. Many rental car companies avoid renting cars to drivers under 25. Other rental car companies charge a premium – like higher insurance rates.

Once you reach age 25, you may find it significantly cheaper and easier to find rental cars across the United States.

Frequently Asked Questions

Final Word

The average 25-year-old driver in the United States pays around $2,900 per year for car insurance, which is 11% lower than what the average 24-year-old driver pays.

As you reach age 25, your car insurance rates may drop significantly, depending on your insurer and other factors. Some insurers drop rates 10% to 20% the day you reach 25, while others drop rates 5% to 10%.

Compare insurance quotes online today to ensure you’re getting a good deal on car insurance at age 25.

James Shaffer
James Shaffer James Shaffer is a writer for and a well-seasoned auto insurance industry veteran. He has a deep knowledge of insurance rules and regulations and is passionate about helping drivers save money on auto insurance. He is responsible for researching and writing about anything auto insurance-related. He holds a bachelor's degree from Bentley University and his work has been quoted by NBC News, CNN, and The Washington Post.
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