May 11, 2022

Cost of Auto Insurance for 20-Year-Olds

20-year-olds pay an average of $2,931 each year for auto insurance.

Everyone feels the pinch when it comes to paying car insurance, but it’s most expensive for those under age 25. The cost of insurance can be a stumbling block to car ownership for 20-year-olds. However, you can do a few things to keep your costs down.

What Is the Average Cost of Car Insurance for 20-Year-Olds?

The average annual cost of car insurance for a 20-year-old is $2,931, making it among the highest. Rates vary based on factors such as the driver’s location, gender, driving history, eligible discounts, type of car, and frequency of driving.1

In general, car insurance is more expensive for 20-year-olds because statistics show that this age group gets into more accidents than older drivers do.

How Does Car Insurance Differ for 20-Year-Olds Compared to Other Ages?

If you’re a driver between the ages of 16 and 25, you’re in the overall highest-paying class for auto insurance. While 20-year-old drivers’ average annual premium is high at $2,931, they still pay less than 16-year-olds, whose rates average $4,368. In fact, the average rate for ages 16 to 19 is $3,751. This data just shows that every year of driving experience makes a difference in your insurance price.

You may have heard that your rates will begin to drop when you turn 25. The good news is that you really don’t need to wait that long. Let’s take a look at some of the average annual premiums, designated by target ages.

Age Average annual premium
16 $4,368
20 $2,931
25 $1,728
30 $1,716
35 $1,449
40 $1,710
50 $1,489
60 $1,425

As you can see, rates drop significantly between ages 16 and 20. The 25-year-old’s rate is similar to a 30-year-old’s, with 35- and 50-year-olds getting the most favorable rates.

TIP

Keep a clean driving record to see your rates go down. One accident or ticket can raise your premium significantly. Safe driving is the most important way to reduce insurance costs.

20-Year-Old Men Pay More for Car Insurance Than Women

If you are a man, on average, you’ll pay about 10 percent more for auto insurance than a woman in your same situation would. This higher rate is because auto insurance companies have collected data over the years that shows men get into more car accidents than women.

Not every state allows this practice of price discrimination. Currently, seven states prohibit price discrimination based on sex or gender2:

  • California
  • Hawaii
  • Massachusetts
  • Michigan
  • Montana
  • North Carolina
  • Pennsylvania

In these states, your gender has no bearing on your premium for car insurance, but your age will still play a significant role in the pricing of your policy.

The Best Way for 20-Year-Olds to Find Cheap Car Insurance

If the thought of paying thousands of dollars a year for car insurance doesn’t sit well with you, you aren’t alone. Young drivers everywhere look for ways to get cheap car insurance.

Here are a few ways you can save on auto insurance if you are 20 years old:

  1. Stick with Mom and Dad. Remain on your parents’ policy to take advantage of their discounts. You’ll get not only their multi-car discount, but possibly also discounts for years for being insured as a household.
  2. Shop around for better pricing. Not every insurance company offers comparable rates. It may take some legwork to shop around, but it’s the best way to find the cheapest rates.
  3. Make yourself eligible for discounts. If you’re in college and getting good grades, you may be eligible for a good student discount. You could also earn discounts by being claims-free, driving relatively few miles, or even getting an inexpensive renters’ policy. Talk to your agent about ways you can save on auto insurance.
  4. Increase your deductible. When you assume more financial risk in an accident, the insurance company rewards you by lowering your premium. If you do increase your deductible, though, make sure you can afford to pay it if you’re in an accident. You don’t want a claim stalled because you can’t pay your portion of it.
  5. Try lowering coverage limits on the policy. If you have an older car, it might not be worth carrying comprehensive coverage and collision coverage on it, because the insurance company will total the car in a minor loss. You can also lower your liability coverage as long as it still meets your state’s minimum guidelines.

 

TIP

Most insurance carriers will let you stay on your parents’ policy but still pay for your own car insurance. Ask the agent about separate billing for your car.

Best Car Insurance Companies for 20-Year-Olds

Shopping around for the best rates will help you save money on car insurance. These are the average rates from four major insurance companies:

Company Average annual premium for a 20-year-old female Average annual premium for a 20-year-old male
GEICO $2,601 $2,846
State Farm $2,645 $3,168
Progressive $3,108 $3,576
Travelers $3,133 $3,664

Again, these are just average numbers. You should still shop around, because insurance companies often have higher or lower prices in different geographic sectors. For example, GEICO may be less expensive in parts of Hawaii but more expensive in parts of California. You won’t know the best price for young adults you can get unless you shop around.

Recap

Twenty-year-olds are one of the highest-paying insurance classes there are. This is because younger drivers are at higher risk of getting into accidents and getting tickets. Twenty-year-old drivers can keep their prices as low as possible by taking advantage of discounts, staying on their parents’ policies, and driving safely and legally. Be sure to compare quotes from multiple providers, entering in the same information each time; drivers pay different rates based on data such as their credit scores and ZIP codes.

FAQs

What insurance should a 20-year-old have?

A 20-year-old needs to start with the minimum coverage to meet state requirements, typically liability coverage. From there, they should consider full coverage, which includes comprehensive, collision, and medical payments coverage.

At what age is car insurance most expensive?

Car insurance is most expensive for 16-year-olds, who pay an average of $4,368 per year. Teen drivers have the highest car insurance premiums due to their high likelihood of crashes.

How does my 20-year-old son’s three points on his driving record affect our car insurance rates?

Expect your son’s policy rates to go up by at least 20 percent if he has three points on his record. You may even need to get a policy with a high-risk carrier to keep him insured, as some major carriers might exclude him from the policy with that many points.

Citations

  1. What determines the price of an auto insurance policy? III. (2022).
    https://www.iii.org/article/what-determines-price-my-auto-insurance-policy

  2. California Prohibits Auto Insurance Companies From Considering Gender When Setting Prices. Consumer Federation of America. (2019).
    https://consumerfed.org/press_release/california-prohibits-auto-insurance-companies-from-considering-gender-when-setting-prices/