Obtaining car insurance is an essential part of driving, but finding affordable insurance as a 21-year-old can be difficult. Without car insurance, you could be at risk of paying for expensive accidents out of pocket. Adequate insurance is also a legal requirement in most places, so if you don’t have insurance, you could face even more fines.
If you’re trying to find a new insurance policy, or just want to upgrade your current policy, it can be helpful to explore the price of various policies for 21-year-olds. Insurance policies for 21-year-olds can be expensive, as insurance companies often determine that drivers in this age group are more prone to accidents than others. Here is a breakdown of how much it can cost to find insurance for a 21-year-old, with some tips that can help you find a cheaper policy.
How Much Is Insurance for a 21-Year-Old
The cost of insurance for a 21-year-old can vary based on a variety of different factors, but on average, the cost of insurance for a 21-year-old is $384 per month or $4,611 per year. One of the biggest factors that determine the price of your policy is the company that insures you. If you’re looking for the cheapest policy available, you should explore Erie, USAA, and Geico. These companies have an average insurance cost of around $200 per month for drivers in this age range.
Why Is Insurance More Expensive for 21-Year-Olds?
Insurance policies for 21-year-olds can be expensive for a variety of reasons. When examining a policy, insurance companies look at the driver’s level of experience, driving history, and what type of car they drive. While policies for 21-year-olds are not typically as expensive as those for teen drivers, many insurance companies still view 21-year-olds as inexperienced. This lack of experience can lead to a higher probability of getting into an accident, which can end up costing the company money. Weighing these factors, most companies offer these expensive plans as a way to balance the risk of insuring a young driver.
How To Get Cheap Insurance as a 21-Year-Old
Besides choosing a company that offers cheap plans for 21-year-olds, there are many other strategies you can use to find cost-effective insurance. If you’re a 21-year-old who is looking for insurance, or a parent who wants to help their child find an affordable plan, it can be helpful to learn about some of the factors that affect the price of your policy. Here are a few tips that may help you find a more affordable plan:
Shop Around for Quotes
While we have already discussed a few companies that tend to offer low rates for 21-year-old drivers, every policy can be different. If you want to find the most cost-effective plan for yourself, one of the best strategies is to shop around. Shopping around insurance companies allows you to gather quotes from each business and determine what plan is the best for your financial situation.
Stay on Your Parents’ Plan
If you’re eligible to stay on your parents’ plan, this can be another effective way to save money. When bundling these plans together, many insurance companies offer rates that are more competitive than if you selected each policy individually. Depending on where you live, you may be able to stay on your parent’s plan until you are 25 years old, so if this option is available to you it can be a great way to reduce costs.
Earn an Education
Many companies offer better rates to people who have advanced degrees. For a 21-year-old, enrolling in college courses or working towards a degree may factor into the price of your policy. Insurance companies often offer these rates because people with higher education tend to be involved in fewer accidents.
Have a Safe Driving History
While many companies still view 21-year-olds as young drivers, if you’ve been driving since the age of 16, you may already have an extensive record of your performance. If you’ve been driving for five years and have managed to avoid accidents, this can factor into the cost of your plan. Proving that you’re a safe driver can be one of the most effective ways of decreasing the price of your policy.
Increase Your Credit Score
Drivers with high credit scores often enjoy less expensive insurance plans. If you want to decrease the cost of your policy, it can be a good idea to develop your credit score. If you want to increase your credit score, it’s a good idea to carefully manage your finances and ensure that you make the required payments on time.
Drive a Safe Car
The type of car that you drive can also affect the cost of your plan. If you want to save money, driving a safe, efficient car can help keep your premiums low. If you already own a car that is expensive to insure, you may want to consider selling it or trading it in for a more cost-effective vehicle.
Live in a Location With Low Rates
Insurance rates can also vary based on the state that you live in. If you really want to decrease your monthly payment, it can be worth exploring the price of insurance in different states. Companies calculate these rates based on how likely it is to be in an accident in these locations, so moving to a state with low rates can not only help you save money, but it can also reduce your likelihood of being in an accident.
Earn the Good Student Discount
Many companies offer a good student discount to drivers who earn high grades in school. If you’re a driver who is enrolled at an educational institution, you may want to explore your insurance company’s student discounts. Earning a good student discount not only gives you the motivation to perform well in school, but can also help alleviate your monthly payments.
These are just a few factors that can affect how much you pay for insurance as a 21-year-old. Every policy is unique so finding your best coverage plan can take time, but the effort is worth it.
At FIXD, our mission is to make car ownership as simple, easy, and affordable as possible. Our research team utilizes the latest automotive data and insights to create tools and resources that help drivers get peace of mind and save money over the life of their car.
