How turning 25 can change your auto insurance rates

Written by Penny Gusner on August 1, 2012 & Posted in Auto Insurance

Teens -- and parents of teens -- are aware of how expensive car insurance can be. This is because auto insurance companies know studies have statistically proved that young adults under the age of 24 are among the worst drivers on the road. This perceived risk causes auto insurance companies to charge sky-high premiums, because the likelihood of a claim is equally sky-high.

As teenagers mature into their 20s, they have been driving for a few years, gained confidence operating a car and learned their limits as a driver. Looking again to statistics, car insurance providers find that young adults over the age of 24 are in fewer accidents and generally present less risk to insurers.The lower the risk drivers pose, the lower the rates. That is why at age 25 most insurers place drivers into a different driving classification and reduce their rates.

Is turning 25 enough?
Being placed into a new driver category may help your car insurance rates, but to keep premiums low, you need to prove yourself as a driver. Keeping a clean driving record is the best way to do this. Not having traffic tickets or accidents on your driving record shows your insurance company that you are a responsible driver who deserves better rates. You have a credit record now, and that can be used as a predictor of future claims.

In contrast, if you have a couple of speeding tickets or an at-fault accident on your driver's history, then the surcharge you'll receive from your insurer will likely counteract any reduction you'll receive for turning 25.

You probably turn 25 just as a lot of other things are happening in your life, and many of those can affect how much you pay as well. If you move, or get married, or buy a new car, your new address, spouse's driving record and new vehicle will be a rating factor alongside your age.

Other ways to save
Not all auto insurance companies drop your rates down at 25; some decrease your rates gradually as you grow older and prove to be a decent driver with a good record. So, if you were expecting a big rate reduction and it didn't happen, then ask your agent why (and ask about other discounts while you're on the phone).

You may also discover that the best way to find low-cost car insurance is not through your current auto insurer but by shopping around with other car insurance companies and obtaining a cheaper rate elsewhere. Differences between insurance companies can be hundreds, sometimes thousands, of dollars.


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