Six Reasons Why Auto Insurance Costs More for Young Drivers (Rates + Discounts)

How much is insurance for new drivers? Young drivers often pay the highest rates due to their age and inexperience behind the wheel. The top six reasons why auto insurance costs more for young drivers have to do with the increased risk to the insurance company. 

Because young drivers are likely to be more reckless and distracted behind the wheel, insurers charge them higher rates. Car insurance for first-time drivers can be double or even triple the rates the average driver pays.

Cheap car insurance for young drivers is still easy to find when you know how to shop for auto insurance discounts. If you want to know how to get cheaper auto insurance for drivers under 25, we’ll show you what individual factors influence your rates and what you can do as a new driver to reduce your risk.

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Why Auto Insurance Costs More for Young Drivers

Age is one of the first factors auto insurance companies consider when deciding your rates. The younger you are, the riskier you are to insure. This table shows how auto insurance rates vary by age and gender:

Age and Gender	Average Annual Auto Insurance Rates
17-year-old female	$6,981.69
17-year-old male	$8,330.16
25-year-old female	$3,051.96
25-year-old male	$3,235.09
35-year-old female	$2,494.16
35-year-old male	$2,563.70
60-year-old female	$2,322.62
60-year-old male	$2,447.32

Why is auto insurance so expensive for young male drivers? Because men are involved in more fatal accidents than female drivers, this has affected the male vs. female auto insurance rates. Let’s discuss other reasons why car insurance for young drivers costs more and how you can still save money on teen auto insurance.

1. Young Drivers Are More Likely to Be in Accidents

Teens and young adults have the second-highest fatality rate among all drivers. In 2019, over 5,600 young people under the age of 25 died in car accidents, compared to 4,958 drivers between the ages of 45-54.

Insurance companies consider statistics like these and decide annual rates accordingly. Accidents will raise car insurance rates at any age, but young drivers will see the highest increases. Young drivers can get cheaper auto insurance quotes by taking a defensive driving course and keeping a clean record.

2. Young Drivers Have an Unproven Record

After age and gender, your driving record rounds out the top three factors that affect car insurance rates. Unfortunately, new drivers come with little-to-no driving history, making it impossible for insurers to judge their driving behavior.

For example, an experienced driver with a good record can probably handle a situation like hydroplaning on a rainy road. An inexperienced driver, however, is new to these experiences and may not respond appropriately. Young drivers are more likely to panic or overcorrect when they face an unusual circumstance on the road, raising their risk of filing a claim.

3. Teens and Young Adults Are More Likely to Be Distracted Drivers

Young drivers report that they are more likely to text, send emails, and talk on the phone while driving. According to the CDC, distracted driving is responsible for 9% of all fatal accidents involving young drivers between the ages of 15 and 20.

Distracted driving also includes talking to other passengers, reading directions, putting on makeup, and eating while driving. In 2019, distracted driving was responsible for nearly 6% of all fatal car accidents.

Due to the increased risk distracted driving presents, insurance companies increase rates for teens who are more likely to be distracted behind the wheel.

4. Young Drivers Are More Likely to Be Reckless

Teen drivers tend to be more reckless behind the wheel, causing them to be in more accidents and file more claims. The good news is this risky behavior is reduced as teens get older.

As young drivers enter their twenties, they are less likely to engage in risk-taking behavior, whether behind the wheel or not. Accordingly, insurance companies will lower rates as drivers age and maintain a clean driving record that shows they are less likely to have an accident.

5. Young Drivers Have Lower Credit Scores

Teens and drivers under the age of 25 are less likely to open a line of credit, especially if they continue to live at home or are enrolled as full-time students. Drivers with low credit scores are considered more likely to file a claim, and insurance companies consider drivers with no credit to be just as high-risk as drivers with poor credit.

Fortunately, states are starting to make it illegal to use credit scores to determine insurance rates. If you live in California, Hawaii, Maryland, or Massachusetts, your credit score will not impact your insurance quotes.

6. Young Drivers Pose a Financial Risk to Insurance Companies

Overall, young drivers pose a financial risk to car insurance companies due to their lack of experience behind the wheel. Since young drivers are more distracted, more reckless, and more likely to get into accidents, they are more likely to cost the insurance company money.

Young drivers often have to shop with high-risk auto insurance companies to find the most affordable rates. These insurers specialize in policies for drivers with poor credit, young drivers under 21, or those with too many accidents on their record.

However, you should compare insurance quotes from at least three companies before buying a high-risk policy. If you wonder, how do I ask an auto insurance company for quotes? It’s easy.

The Cheapest Auto Insurance for Young Drivers

How much is insurance for a new driver? Teens can pay anywhere between $200 to $1,000 more per month than drivers in their early 20s. Auto insurance quotes comparison is the easiest way to find affordable driving insurance for teenagers. 

This table breaks down auto insurance rates for drivers under 19 and under 25 to see where you can get the cheapest rates based on age. Each of these companies offers competitive discounts designed for young drivers who are enrolled in school or driving classes.

Auto Insurance Savings for Young Drivers

Auto Insurance Company	Monthly Teen Auto Insurance Rates (16-19 yrs)	Monthly Insurance Rates (20-25 yrs)	Safe Driver Discount	Good Student Discount
Farm Bureau	$231	$125	up to 30%	Maintain a "B" average or higher; Discount amount varies
Erie	$311	$194	Discount amount varies	College student discount; Discount amount varies
USAA	$423	$180	3%	Maintain a "B" average or higher; Discount amount varies
Geico	$479	$239	10%	Maintain a "B" average or higher; Up to 15%
State Farm	$577	$204	5%	Maintain a "B" average or higher; Up to 25%
Progressive	$772	$234	10%	Maintain a "B" average or higher; Up to 10%
Allstate	$1,141	$317	10%	Smart student discount; Discount amount varies

Farm Bureau and Erie offer the cheapest auto insurance for young drivers. However, these companies are not available in every state, and you may have to shop for teen car insurance with other companies. 

🚗Drivers under 25 pay up to $5k more a year for insurance than those in their 30s.😲 Do you fall in this age range? 👉Price match here: https://t.co/TSq0vDEjME. Learn ways to save on auto insurance for young drivers: https://t.co/J43PJYIyTo pic.twitter.com/CkyAQkMKeN

— AutoInsurance.org (@AutoInsurance) February 16, 2023

Fortunately, Geico and USAA offer very competitive quotes for young drivers. USAA is only available to military members and their families, but Geico is available across the country and offers some of the highest discounts for students and safe driving.

Read our USAA auto insurance review and Geico auto insurance review to compare.

Companies That Offer Young Driver Auto Insurance Discounts

Young drivers can take advantage of good student discounts and safe driving discounts to lower their insurance rates. However, discounts can vary by company, and some young drivers are eligible for more discounts, including full payment and usage-based discounts.

This table shows the most common discounts for young drivers with the most popular auto insurance companies:

Auto Insurance Discounts for Drivers Under 25

You may also find that a local insurer in your city offers unique discounts for teen and young drivers. We recommend shopping around with at least three different companies to find the best car insurance for young drivers near you.

Read more: Auto Insurance Discounts for Farm Bureau Members

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How to Get Cheaper Insurance for Young Drivers

Insurance companies take on a huge financial risk with young drivers. Therefore, your insurer’s rates will be higher to compensate for that risk. 

Five things you can do to lower your auto insurance rates right now are:

• Get on your parent’s policy. Adding a teen driver to car insurance is much cheaper than buying a new policy.
• Earn good grades. Maintaining a “B” average or higher can earn you between 3%-10% off your rates.
• Go to driving school. More hours behind the wheel means more experience and cheaper auto insurance rates.
• Drive an older vehicle. The cheapest car for a teenager will be from 2018 or earlier.
• Install additional safety features. Adding alarms and etching your VIN into the windshield can earn you between 5%-15% off your rates. 

In our helpful guide, Auto Insurance Discounts, you can learn how to shave 30% off your auto insurance bill.

The best thing young drivers can do to lower their insurance costs is to practice safe driving habits. Young drivers should avoid accidents and speeding tickets at all costs.

It is also worth looking into specific companies that might have discounts specifically designed for your situation. For example, Geico offers a discount for seat belt usage, while Erie auto insurance provides additional coverage to college students.

Read our Erie Auto Insurance Review to learn more.

Compare quotes from various companies to see which can offer you the best rates and discounts. The best insurance for young drivers will look past your age and work with you to find a policy that fits your lifestyle and budget.

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