Most states require car insurance for all drivers, regardless of age and experience. Because drivers have several types of plans and providers to choose from, you may want to research different insurance companies to find one that offers the coverage you need at a price you can afford. Let’s break down what you need to know about car insurance for drivers under 25.
What Is Car Insurance?
Car insurance is a contract a driver signs with a company that protects the driver against financial loss or burdensome costs that occur in the event of an accident. In the most basic terms, the contract typically includes an agreement for the driver to pay a monthly fee, called a premium, to the company. Depending on your plan, insurance can also cover theft of your vehicle or items inside your car.
In the event of an accident, the insurance company covers any pre-agreed costs. For example, if your repairs cost $10,000 and your insurance plan covers up to $7,000 in damages, you as the driver only have to pay $3,000 instead of the entire sum. The accidents that the insurance company agrees to cover are outlined in the driver’s policy. The most common types of insurance include the following:
Bodily Injury and Property Damage Liability
This type of coverage includes any accidents that result in injuries, deaths, or property damage that you cause. With this insurance, your premiums cover the cost associated with these events so that you don’t have to pay out of pocket when the injured party submits a claim.
Uninsured or Underinsured Motorist Coverage
This insurance coverage protects you from uninsured or underinsured drivers who may cause an accident that damages your vehicle or person. If the other motorist cannot pay the cost of the hospital bill or car repair, you could be responsible for those charges if you don’t have uninsured or underinsured motorist coverage.
Collision insurance offers coverage for any instance when your car undergoes damage. This can include collisions with other moving vehicles or damage it takes on from objects, such as tree branches, fences, or stationary lighting fixtures. Many drivers opt for collision insurance when leasing or borrowing a car, as this can protect the lender in case of an accident. You can also purchase collision insurance if you have a car that’s completely paid off, as this can add additional coverage to your existing insurance policy.
This insurance is a catchall for any other incidents that may occur and result in damage. Comprehensive coverage protects you from any events outside of your control, including weather, vandalism, or animal interference.
Car Insurance for Drivers Under 25
Car insurance companies take various factors into account to calculate how much you will pay for policy and premiums, and one of them is your age. Being a young driver can cause your premiums to be higher than they would be if you had more experience driving. This is because insurance companies factor in your driving history and the statistical likelihood of an accident for someone in your age range. These factors work against young drivers. However, some factors work in young drivers’ favor:
- Student discounts: If you’re a full-time student, you may be eligible for a discount with some insurance companies.
- GPA discounts: Some insurance companies offer better rates for students with good grades. You may have to maintain your GPA to keep your reasonable rate, but insurance companies take your good grades as an indication that you are a responsible person.
- Renters policies: You may be able to apply for a multi-policy plan if you also have renters insurance on your apartment. Younger people are more likely to rent than to buy a home, and in this case, that can work in your favor.
- Employer discounts: If you work for a specific company that offers discount programs or covers car insurance for you, you may be able to cut some of the cost of your premium.
- Driving history discounts: If you have ‘t been driving for long, you may not have had any accidents in your past, which can contribute to a lower premium.
Insurance Companies for Drivers Under 25
Most car insurance companies offer policies for drivers under 25. Two of the best options are State Farm and Allstate.
The average price for a 17-year-old insured with State Farm is $3,055 per year, which is $254 per month. State Farm also offers a Steer Clear program, which awards a discount of up to 15% off your policy if you’ve avoided moving violations or accidents. With a full roster of coverage for a reasonable price, State Farm insurance may be the best car insurance for someone under 25.
The average price for a 17-year-old is $4,716 per year or $393 per month. Allstate offers a Drivewise program that can save young drivers up to 40% off their policy as long as they are safe drivers. Drivers can combine this program with other discounts targeted toward young drivers, like new car discounts or discounts based on grades.
How To Choose Insurance an Insurance Plan
Picking the best insurance plan can come down to where you live and the insurance policies available in your state, as well as driving history and affordability. Here are some things to look for when picking out the best insurance for an under-25 driver:
- Price: Compare the price of different insurance companies in your area to find the lowest quote. If price is your biggest priority, you can get the insurance that has the lowest premium.
- Coverage: As a young driver or the parent of a new driver, you may want the best coverage you can afford to protect you from financial liability in case of an accident.
- Discounts: Some companies offer discounts for specific situations, such as having good grades, avoiding collisions, or bundling your services. You may be able to combine discounts to get a better premium.
- Ratings: You can review ratings from previous clients of the insurance company you’re researching to understand how good their customer service is. You can use those testimonials to predict how your own experience may go.
Finding the right car insurance for drivers under 25 can require research. Once you know what kind of coverage you’re looking for and how much you can afford, you can get quotes from different insurance companies to compare and find the right policy for you.
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.