When Does Car Insurance Go Down?

Policyholders love to see premiums drop at renewals and this post explains what makes them fall. When does automobile insurance go down is a fairly general question and we will try to break it down below. Your rates may gradually come down in many stages and after specific events or changes in circumstances. That is why it is important to rephrase this question for different cases and try to give more specific answer for each case and this is done below.

What Age Does Car Insurance Go Down?

Age is probably the most important factor in the early years of driving. Between the ages of 16 and 25 you can see substantial drop in your rates year by year. Then, rates calm down like a sea after a storm. You may see slightly cheaper premiums in your 40s and 50s but they start going up again when you turn 70. After the age of 25, other factors become more influential in lowering car insurance premiums.

We have looked at a few studies that demonstrate how age affects auto insurance rates and came up with the below conclusion partly based on this study. On the below table, we took the estimated premium quotes at the age of 25 as 100% and showed you how the other ages differentiate in relation to the rates at the age of 25. For example, an average driver pays 250% (2.5 times) at the age of 16 in comparison to what they would pay when they turn 25.

As mentioned above, vehicle insurance rates mature at the age of 25 and therefore we can use the average cost of car insurance in the US as benchmark in connection with the table below. For example, average premium expenditure per vehicle for the United States is $841. This figure tells us how much is the average cost of insuring a vehicle and doesn’t tell the type of coverage. However, it is a good enough indication for anyone who is looking for a decent level of liability coverage and a bit more. So, we can say that average 16 year old should be able to find an agreeable policy for the price of $2,102 (= 2.5 x $841). However, this may be a premium for a basic policy.

We can also estimate roughly how much an average driver would pay for a full coverage car insurance since we know that the average full coverage cost in the US is $1,325. Then, an average 16 year old driver should pay $3,312 (= 2.5 x $1,325) for a full coverage. You can calculate rough average premium for either a basic or full coverage for your age and state. You can find average premium expenditure and estimated full coverage cost for your state by following the link above and apply it to the relevant age and gender on the table below.

Table: Average Car Insurance Rates by Age 16 to 26, in comparison to rates at 25 (100%)

Age Women Men Average
16 230% 270% 250%
17 210% 230% 220%
18 185% 210% 200%
19 150% 165% 160%
20 140% 160% 150%
21 125% 140% 130%
22 115% 130% 120%
23 110% 120% 115%
24 105% 112% 110%
25 100% 100% 100%
26 99% 97% 98%

It is worth stressing that these are estimated figures and you may pay a lot more or less for your own policy depending on many factors. Two of the key factors are which state you live in and who is your insurer. If you can manage to find the cheapest vehicle insurance company in your state you can probably reduce your premium several times over without any exaggeration, in comparison to being insured by one of the most expensive insurers. It is fair to say that how much premium you pay largely depends on how well you compare quotes from various insurers.

Another key determining factor is the driving experience. If we look at the table above we see that rates are at its highest at 16. It is almost impossible to talk about driving experience at 16. But 17, 18, and 19 year old drivers would have some experience. That is why it isn’t possible to give a definitive answer to what age does car insurance go down and how much does it go down. It partly depends on your driving experience. For example, an 18 year old new driver would probably pay higher premium than a 17 year old with 1 year no claim.

What Age Does Teenage Car Insurance Get Cheaper?

Teen auto insurance premiums are the highest because of the fact that they are the least experienced and most dangerous drivers. This is naturally due to age and maturity. As you get older you gain some driving experience and maturity that both affect your premium cost substantially. Teenage auto insurance go down gradually by age and experience. All being equal, a 19 year old would get about 35% cheaper vehicle insurance quote in comparison to a 16 year old. However, it may be as much as 60% cheaper if that 19 year old has 3 years clean driving and claim record. Clearly, lack of experience scares the insurers and some insurers are more scared than others.

What Age Does Car Insurance Rates Drop for Males?

If we look at the above table for average car insurance rates by age 16 – 26, it is clear that young male drivers are the highest risk driver group. A 16 year old male driver pays about 15% higher premium on average in comparison with the same age female driver. This is partly because of the higher accident rates among male teen drivers and the fact that they are known to take more risks on the roads than any other age group. This rate gap between male and female drivers continue until they turn 25. At this stage, the gap is closed and there is a very little difference between male and female rates in favor of female drivers.

When Does Car Insurance Start Falling for Females?

Teen female drivers aren’t penalized as bad as male drivers but they are still made to pay for their age and inexperience. Insurers are known to view female drivers as lower risk than males and they offer their cheapest car insurance for ladies. This rate difference is at its clearest in the teen years and slowly closes at later years. Most of the time, women can get cheaper quotes than men.

Does Auto Insurance Premium Fall when You Turn 25?

Perhaps we need to rephrase this question and ask does car insurance go down at 25 regardless of your gender? According to the above table, it is clear that turning 25 is a major milestone in terms of automobile insurance. Of course, it is not one sharp drop and rates keep coming down gradually pass your teen years and early twenties. However, it can be said that drivers reach auto insurance rate maturity at the age of 25. On the table, you can see large drops in premiums year after year all the way from 16 to 25. But you only see 2% drop from 25 to 26. Looking at driving restrictions and conditions placed on some policies we can see that insurers emphasize 25 as the turning point. For example, you may be able to insure certain sports cars only after you turn 25.

When Does Auto Insurance Go Down after Accident?

Traffic accidents have the affect of wiping your good driver discounts away and therefore increasing your premium at the next renewal. See how much does insurance go up after an accident? The good news is that your premium will start going down just a year after the accident, as long as you avoid another accident or a major traffic ticket in the meantime. You will usually see further discounts for each year passing without a claim. Your rates should go back to normal after the 3rd year from the accident related claim. Most insurers only look at the last 3 years of claims when they calculate their premiums. However, some insurers may check as far as 5 years and you may need to avoid them.

When Does Vehicle Insurance Go Down? – 10 Other Factors

Age is the most prominent factor in premium calculations in the early years of driving. Teen drivers can see large reductions in premiums year after year, as long as they don’t have any claim or traffic ticket. However, its effects largely disappear at the age of 25, as demonstrated on the table above. Then you need to start looking at other factors that help you save money on car insurance. Below, we discuss 10 factors that have varying levels of premium reducing effects.

  1. Shopping Around

Shopping for the best quotes is the most affective and easiest method of reducing your automobile insurance. If you don’t compare quotes, you may end up paying 3 years worth of premium to one of the most expensive insurers in your state, in comparison to getting insured by one of the cheapest insurers. You always have a chance to lower the premium costs if you shop around, no matter what age or type of driver you are.

And the easiest way of shopping is getting instant auto insurance quotes online and comparing them. A comparison website can help you pinpoint the cheapest insurers in no time.

  1. Buying a New Car

Your auto insurance can go down a lot when you swap an expensive to insure automobile with a fairly cheap to insure one. There could be a few reasons why a particular vehicle isn’t popular with insurers. You can quickly check its insurance rating or you can even get insurance quotes before buying a car to check how much it would cost to insure it.

You don’t have to switch from a sports car to a minivan to save money. Even switching from a sporty Audi to a sensible Toyota can be enough to bring your premium down by 20 – 30%. But your automobile insurance could fall by half if you sell your sports car and buy a minivan.

  1. After Getting Married

Auto insurers love married drivers because it is statistically proven that married people get involved in fewer accidents than single drivers. They make sure they wear seatbelt and follow traffic rules. Usually, couples watch and correct driving mistakes of each other. Also, married people don’t take risks because they feel responsible for their partners and family. You may be able to claim around 10% discount just after getting married.

  1. Buying Your Home

If you are now a homeowner you should be able to claim a little bit more discount. Insurers consider homeowners to be more stable than renters and therefore offer better rates. You should be able to save around 5 – 10% on vehicle insurance regardless of insuring your new home with the same insurer or not.

However, you can save a bit more by bundling home and auto insurance. Size of savings will depend on the insurer you choose.

  1. Moving out of City

In terms of automobile insurance, one big move would be moving out of a large city and into a small town. Even moving from a downtown to a suburb will save you large sums of money. Depending on the city and your new zip code you can save 20 – 40%

  1. Moving out of State

Every state has own insurance laws, accident statistics and other demographics that affect average premiums. Many good drivers pay considerably high premiums because of higher than average rates in their state or city. For example, a good driver in New Jersey may pay higher premium than a bad driver in New Hampshire because of the high rates in NJ.

  1. Removing Teens off Your Policy

Adding a teen to your policy can potentially increase your premium by 30 – 50%. Removing a teen would have the opposite affect and reduce your premium. If your child left home you can remove him/her from your policy. It may even be possible to remove a child who is living in a college campus more than 100 miles away from home. Talk to your insurer and find out if it is possible to remove a youngster off your policy. Some insurers may be happy to remove a teenager from their parent’s policy, even though they live in the same house, if the youngster has his own car and insurance.

  1. Improving Credit Score

Your insurer may pick up improved credit score and it may be why your car insurance has gone down. If you can improve your credit score you may be able to influence your premium enough to go down. You can save as much as 20% when you improve your credit score from bad to good. The opposite would be true if your credit score deteriorates. Then, you should try to find the best vehicle insurance for bad credit.

  1. Retirement

When you retire you don’t need to commute anymore and therefore you can save by switching to pleasure use car insurance from pleasure and commute. Naturally, your mileage would drop when you are retired and that is why your premium should go down.

  1. Change of Job

Changing your job can result in low mileage for many reasons. For example, you may start using public transport for daily commute. Or your new workplace is nearer to home and you can walk or cycle. Anything that reduces your yearly mileage considerably should reduce your auto insurance too.

Most changes in your circumstances have the potential to reduce the premium. Some may reduce the premium a lot and some may only affect it slightly. Also, the opposite is true and they can increase the premium.

Share on Pinterest
There are no images.