Mathew B. Sims is Editor-in-Chief and has authored, edited, and contributed to several books. He has been working in the insurance industry ensuring content is accurate for consumers who are searching for the best policies and rates. He has also been featured on sites like UpJourney.

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Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years (BBB A+). He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com and Safeco. He reviews content, ensuring that exis...

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Reviewed by Daniel Walker
Licensed Auto Insurance Agent

UPDATED: Aug 28, 2020

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Things to Remember..

  • Young drivers are inexperienced on the road and are therefore considered higher risks
  • Young drivers are statistically more likely to engage in dangerous behavior behind the wheel
  • Young drivers can lower their insurance rates by driving safely and asking for various discounts

Everyone wants cheap auto insurance rates, but there are many reasons auto insurance costs more for young drivers.

Young drivers can pay up to double, or even more, than the average auto insurance rates.

Why is auto insurance so expensive for first-time drivers? What factors affect the cost of paying for vehicle insurance for teens? Why do insurance companies charge more for a young driver? There are many factors that contribute to why young drivers pay so much more for automobile insurance.

If you want to know how to lower insurance rates for young drivers, we’ll show you what factors influence the rate someone pays for their car insurance and how to reduce insurance costs for young drivers. This article will explain why insurance companies charge more for a young driver.

To get a quote for the lowest insurance costs available to young drivers, enter your ZIP code in our FREE tool above.

Young Drivers Have an Unproven Record

Why do insurance companies charge more for a young driver? You probably already know that insurance companies partially base insurance premiums on the driver’s record.

If you have a clean driving record with few or no accidents and no traffic violations, you will likely get a break on your insurance premiums. On the other hand, if you have had multiple accidents, especially if you were at fault, you’re going to pay a higher rate for auto insurance.

You’ll pay a higher rate if you have a DWI or a DUI on your record. Some insurers may refuse to grant you a policy at any price.

A driver’s record gives an insurance company a statistical base to analyze the risk of insuring the individual. For a young driver, this lack of a record is problematic. The insurer has no historical record to make a judgment on whether the young driver is a safe or reckless driver.

For example, the chart below shows how your driving record can impact your annual rates:

Average Annual Auto Insurance Rates Based on Driving History
CompaniesRates with Clean RecordRates With 1 AccidentRates With 1 DUIRates With 1 Speeding Violation
USAA$1,933.68$2,516.24$3,506.03$2,193.25
Geico$2,145.96$3,192.77$4,875.87$2,645.43
American Family$2,693.61$3,722.75$4,330.24$3,025.74
Nationwide$2,746.18$3,396.95$4,543.20$3,113.68
State Farm$2,821.18$3,396.01$3,636.80$3,186.01
Progressive$3,393.09$4,777.04$3,969.65$4,002.28
Travelers$3,447.69$4,289.74$5,741.40$4,260.80
Farmers$3,460.60$4,518.73$4,718.75$4,079.01
Allstate$3,819.90$4,987.68$6,260.73$4,483.51
Liberty Mutual$4,774.30$6,204.78$7,613.48$5,701.26
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In such a case, the smartest business decision that the insurance company can make is to assume the worst-case scenario because it protects the insurance company from offering low rates and then being hit with high claims.

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Young Drivers are Less Experienced

Like most skills, learning to drive a car takes time, effort, and practice to perfect. The fact is young drivers simply haven’t had enough time behind the wheel to be well skilled at driving.

In fact, many young drivers are granted their license after only having a couple of hours of driving experience. Inexperienced drivers have a harder time reacting appropriately to driving hazards than experienced drivers.

For example, an experienced driver will be more able to stay calm and handle a situation like hydroplaning on a rainy road or a car drifting into his or her lane.

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 roads.

According to studies by the Research Institute at the Children’s Hospital of Philadelphia, 75 percent of serious crashes by teen drivers occur as a result of errors related to inexperience behind the wheel.

These errors most commonly include failure to scan for road hazards, excessive speed, and distraction by factors inside or outside of the vehicle.

The one area teens are more likely to do well than adults is general knowledge of driving laws in their state. For example, because they have been studying their driving manuals relatively recently, they are more likely than an adult driver to be able to explain at least one legal use of hazard lights and one illegal use of hazard lights.

Young Drivers are More Likely to Engage in Distracted Driving Behaviors

When it comes to getting distracted behind the wheel, teens are more likely to find themselves focused on something other than driving while on the road.

https://www.youtube.com/watch?v=sMNGCHRIjTs

Distracted driving has been blamed for up to 18 percent of automobile crashes. The U.S. Government has an entire website dedicated to educating the public about the dangers of distracted drivers.

Teens texting while driving is what comes to mind, but distracted driving can take many other forms such as:

  • Talking to others in the vehicle
  • Looking for an object in the vehicle
  • Reading directions or applying makeup while driving
  • Eating and drinking

All of these things can take a driver’s attention away from the road at critical times, making them more susceptible to being involved in an accident. In fact, the Centers for Disease Control (CDC) reports that 15 people are killed each day and about 1,200 injured as a direct result of distracted driving crashes.

The U.S. Government reports that 11 percent of drivers under age 20 who were involved in a fatal car accident were engaged in distracting behavior during the crash, according to Distraction.gov.

Automobile insurance companies take these facts into account when assigning insurance premiums for young drivers.

Education about the dangers of distracted driving is key to helping young drivers not only learn to preserve a good driving record but to keep themselves and others on the road safe.

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Young Drivers are More Likely to be Reckless

Scientists have actually proven that lack of complete brain development contributes to teen’s tendencies to engage in risky behavior. There are a number of studies available that show teenagers are more likely to engage in risky behaviors like smoking and drinking despite the fact that they know these things are dangerous.

According to the CDC, 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 and their brain matures.

As young drivers enter their twenties, they are less likely to engage in risky behaviors whether behind the wheel or not. As these risks are reduced, so are the chances that the individual will be involved in an automobile accident.

Accordingly, insurance companies lower the premiums for drivers as they get older and keep a clean record because statistics show that they are becoming less likely to have an accident.

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Young Drivers are Statistically More Likely to be Involved in an Accident

Whether it is a result of inexperience, distraction, speeding, or poor choices, it is a simple fact that young drivers are more likely to be involved in an accident.

Insurance companies charging more for young drivers is not unfair or prejudice. Rather, it is soundly grounded in years of research, data, and statistical fact-finding.

Insurance companies carefully study accident statistics in order to set their premiums.

Their goal is to make premiums low enough that consumers can afford them and they stay competitive in the market, but high enough that they cover their losses from claims.

In order to do so, insurance companies must set higher rates for young drivers. How much does auto insurance cost for teens after an accident?? It can be thousands of dollars per year, so teens must be incredibly careful on the road.

Young Drivers Pose a Financial Risk to the Insurance Company

Young drivers are a statistical financial risk to insurers. The more likely young drivers are to get into accidents, then the more likely they are to cost the insurance company money. But exactly how much do young drivers pay for auto insurance?

The insurance companies have to charge more to cover this risk. The chart below shows the average annual premium for young drivers across the nation:

Average Annual Auto Insurance Rates for Young Drivers Based on Gender
Driver Age and GenderAverage Annual Auto Insurance Rates
Single 17-year-old female$7,559.03
Single 17-year-old male$9,027.64
Single 25-year-old female$2,703.28
Single 25-year-old male$2,889.27
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The change in rates from age 17 to age 25 is several thousand dollars a year, which just goes to show how much insurance companies have to charge to mitigate the risk of insuring young drivers.

To give you a better idea of what this means for your expenses, the chart below breaks this down into 6-month premium payments:

Average 6-Month Auto Insurance Rates for Young Drivers Based on Gender
Age and GenderAverage 6-Month Auto Insurance Rates
Single 17-year-old female$3,779.51
Single 17-year-old male$4,513.82
Single 25-year-old female$1,351.64
Single 25-year-old male$1,444.64
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If you want to know how much teen auto insurance costs per month, the chart below shows you these average payments broken down into monthly increments:

Average Monthly Auto Insurance Rates for Young Drivers Based on Gender
Age and GenderAverage Monthly Auto Insurance Rates
Single 17-year-old female$629.92
Single 17-year-old male$752.30
Single 25-year-old female$225.27
Single 25-year-old male$240.27
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It’s easy to see here what age group pays the most for car insurance. The cost difference between 17-year-old drivers and 25-year-old drivers is several hundred dollars each month, but this is based on averages. If you end up with a DUI at age 24 you’ll find that your rates won’t drop the way they do in the chart above. Which car insurance company is the cheapest for young drivers? It is dependent upon many factors, including potential discounts and the type of car they drive.

Of course, shopping around for the best insurance rate will help ease the burden of the higher cost of insurance on young drivers.

Young drivers can also look for discounts that mitigate their higher premiums. Discounts aren’t always advertised, so be sure to ask your insurer what you may be eligible for.

What is the best way for a young driver to save money on their auto insurance?

How can I lower car insurance rates for young drivers? To keep insurance costs low, it is important for young drivers to maintain a clean driving record. A single accident or traffic ticket can cause a teen driver’s premiums to skyrocket, making an already expensive premium skyrocket. An accident or a ticket will also stay on your driving record for years, which means that your premium won’t go down slowly over time the way it normally would with a clean record.

If you’re wondering how to lower insurance for young drivers, discounts are the answer. There are some discounts that are available to young drivers that can help make your insurance premium more affordable.

How to get lower insurance for a young driver? A good student discount is the most common way for a young driver to lower their insurance premiums. Most insurance companies offer their good student discount to students with a B average or higher, but you will need to check with your insurance company to find out the specific details of their good student discount.

Many companies also offer an away at school/distant student discount for college students who are leaving their car at home and attending a school more than 100-150 miles away. This discount is offered with the intention that the student is still covered, but they are expected to spend significantly less time driving.

Not all discounts are centered around a young person being a student, however. There are some other discounts that may also be helpful for young drivers, such as:

  • Driving Device/App – Some insurance companies offer discounts for drivers who will let them track their driving behavior with a phone app or a device placed in the car.
  • Safety Features – Some insurance companies will offer discounts for drivers of any age who have certain safety features on their vehicle, like lane departure notifications and adaptive headlights.
  • Full Payment – Many, if not most, insurance companies offer a discount to drivers who are willing to pay their entire premium at once instead of breaking the payment up into quarterly or monthly premiums.

It is also worth looking into specific companies that might have discounts specifically designed for your situation. For example, 21st Century Insurance offers a discount for non-smokers/non-drinkers, while Geico offers a discount based on seat belt usage. There are a variety of other discounts available, including green vehicle discounts, low mileage discounts, and discounts based on where your car is parked. This is all completely separate from other rating factors, including the type of car you drive and your ZIP code.

This is why it is a good idea to get quotes from multiple companies to make sure you are getting the best possible rate.

What is the cost of insurance for first-time drivers over the age of 25?

A new driver over the age of 25 is relatively rare, but it does happen. Generally speaking, a new driver over the age of 25 will pay higher rates than an experienced driver of the same age, but by a relatively small amount.

Statistically, older drivers are calmer and less prone to reckless behavior behind the wheel.

Ruth Gonchar Brennan was born and raised in New York City, so she didn’t get her license at 16 like most drivers. “I was 38 when I first got my license after moving to Connecticut.” she explained. When asked about her insurance costs, she says, “It was, as I recall, not expensive. My car was also not expensive, which helped keep the cost low.”

When asked why she thinks her insurance premium was so reasonable as a new driver, Ruth explained, “I think the insurance companies understand that older drivers are more patient on the road.”

This makes sense when you consider that recklessness and a likelihood to participate in distracting behavior are a big part of how insurance rates are determined for 16 and 17-year-old drivers. Older drivers are statistically less likely to speed, text while driving, or experience road rage, making them a safer financial risk for an insurance company.

There are very few statistics regarding this particular situation, so it is important to speak to your insurance company about their rates in your particular situation.

Insurance for Young Drivers: The Bottom Line

Insurance companies are taking on a huge financial risk with young drivers, so the premiums they charge are going to be higher to compensate for that risk.

There are many reasons car insurance for under 25 year olds is more exspensive, including lack of experience, recklessness, no driving record, and a likelihood of driving while distracted. All of these things will change over time, however, allowing drivers to see a significantly lower rate once they are in their mid-twenties.

The best thing young drivers can do to lower their insurance costs is to be vigilant on the road, practice safe driving behavior, and avoid accidents and speeding tickets at all costs.

To get a quote for the most affordable insurance for your young driver, enter your ZIP code in our FREE tool below.

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Frequently Asked Questions: Reasons Auto Insurance Costs More For Young Drivers

If you still have questions about why auto insurance costs more for young drivers, take a look at the frequently asked questions below:

#1 – Why is insurance so expensive for young male drivers?

If all new drivers are at an increased risk for accidents, why do young males pay the most expensive auto insurance premiums? Statistically speaking, young men are more likely to speed, drive recklessly, and otherwise make decisions that could lead to an accident behind the wheel of a car. This statistic is based on years of claims being filed by young drivers, giving insurance companies every reason to charge more for male teens than female teens.

However, several states have passed laws making it illegal to rate by gender when it comes to auto insurance. Montana was the first to ban gender-based rating in the 1980’s, but California, Massachusetts, Hawaii, and several others have since changed their laws to stop insurance companies from charging more for male drivers. Residents of those states will see no difference in premium between young men and women.

#2 – Do you need to be a certain age to have auto insurance?

The only age limitation for insurance is that you must be of legal driving age to insure a vehicle. If you are the legal owner of a car you are required to have insurance for that vehicle, no matter what your age. If you are the primary operator of a car owned by someone else, they are technically the ones required to insure that vehicle, though you may also purchase a non-owners policy to protect yourself in the event of an accident.

There are reasons a 16-year-old with a newly minted drivers license might want to wait on purchasing their own insurance, however.

It is typically much cheaper to add a teen driver to a parent’s insurance policy than it is to give them a policy of their own. This is because it allows them to take advantage of many discounts they might otherwise not have access to, such as bundling discounts and employer group discounts.

They may also find that purchasing and registering a car on their own is difficult, which means most teens have a car that is registered to (and insured by) their parents or guardians.

#3 – What are 3 reasons insurance rates are higher for drivers under 25?

Why is car insurance so expensive for young people, and specifically. why are car insurance premiums higher for drivers under 25? There are six reasons listed above to explain why insurance rates are higher for drivers under 25, but here are three additional reasons you might see higher rates for younger drivers:

  • Teen drivers are single – Insurance companies give lower rates to married drivers because having someone who is committed to you and depends on you encourages you to make responsible choices. It isn’t just about their marital status, however – most of the statistics used to determine a driver’s rate benefit older, more established drivers.
  • Discounts tend to be for adults only – Except for the standard good student discount, almost all insurance discounts are things you can only earn as an adult. Occupational discounts, homeowner discounts, etc. by their very nature only apply to people old enough to own a home or work in a specific occupation.
  • Seat belt use – In the CDC link above, they talk about the fact that approximately half of all teen drivers that died in car accidents were not wearing seatbelts at the time of the crash. This is another example of reckless behavior from young drivers that is used to help determine insurance rates.