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When your driving career is just beginning as a teen, you can expect to pay some of the highest auto insurance rates imaginable, thanks to your inexperience on the road and the risk insurers see in teen drivers. As you move into young adulthood, your experience, driving record, and credit score will begin to have more of an impact on the price you pay to insure your car.
If you’ve kept your driving record and credit history clean, you can expect to see your rates decline significantly. You still won't see the low insurance policy premiums you can expect later in life, but they should start trending downward. Drivers who have lots of speeding tickets, a DUI, or a low credit score can expect their premiums to stay sky-high.
While paying for car insurance is far from the most enjoyable part of driving, it's a necessary part of driving. It's also mandatory in almost every state and required by most financing companies if you're financing or leasing a vehicle. Many factors play a role in setting insurance rates, so it is critical you share your unique information with insurers so you can find the car insurance rates that meet your specific circumstances and needs.
Who Has the Best Rates for Young Adults?
According to our study of auto insurance rates, USAA offers the best prices for young adults. On average, our young adult driver profile insured through USAA has a study rate of $1,073 per year to insure their vehicle. Though any individual's rates will vary, USAA offers our young adult customer profile a representative premium that is about $67 less expensive per year than the next least costly insurer on our list. USAA's study rates are about $434 lower than the average representative rate for our young adult driver profiles offered by the nine insurance companies in our study.
It’s important to remember, however, that USAA (short for United Services Automobile Association) is only available to members of the military, veterans, and their eligible family members. For those who are not a member of one of those groups, Geico is the least expensive option for our young adult drive profiles in our insurance company rate survey. This insurer's annual study rate for a young adult profile is $1,140.16.
How We Found the Cheapest Insurance Companies for Young Adults
At U.S. News, we’re all about helping people make life’s important decisions. Our college rankings, launched in 1983, set the standard in educational rankings. Our ranking in other fields, like healthcare, government, and the automotive sphere, help people and thought leaders make choices that make lives better. Now we’re continuing to empower you with the information you need to make the right choices for your life with our Cheapest Car Insurance Rankings.
Our Study Rates
For this study, U.S. News worked with Quadrant Information Services to analyze a report of insurance rates in all 50 states from the 10 largest national car insurance companies, though not every company operates in every state. Quadrant obtained publicly available rate data that car insurers file with state regulators. Our study rates are based on profiles for both male and female drivers aged 25, 35, and 60. Vehicles used include the 2015 Honda Civic, 2015 Toyota RAV4, and 2015 Ford-F-150, with annual mileage ranging from 6,000 and 12,000. Three car insurance coverage levels were used, as were credit tiers of good, fair, and poor. Clean driving records and records with one accident, one speeding violation, and one DUI were also used in the calculations of certain driver archetypes.
To get the state-wide study rates shown here, we computed the mean rate for male and female drivers ages 24, 35 and 60 who drive 15,000 miles per year, have medium coverage, good credit, and a clean driving record. The rates shown here are for comparative purposes only and should not be considered "average" rates available by individual insurers. Because car insurance rates are based on individual factors, your car insurance rates will differ from the rates shown here.
Cheapest Car Insurance Companies for Young Adults
State Farm: $1,437.17
American Family: $1,477.88
More About the Least Costly Car Insurance Companies for Young Adults
While the price of car insurance is an important factor, young drivers should look for more from an insurance company than just an affordable price. Here’s a look at the five least expensive auto insurance companies for young adults.
USAA offers a full array of financial services to its members. Founded in 1922, the auto insurance company serves current military members, retired veterans, former military members who were honorably discharged and qualifying members of their families.
In addition to car insurance, USAA also offers other types of insurance, including homeowners, renters, and life coverage. USAA's financial services include banks accounts, vehicle loans, mortgages, retirement planning, and more.
In our ranking of the country’s best car insurance companies, USAA holds the top spot. In addition to affordable rates for young adults, USAA has an excellent reputation among its member-customers for its claims handling. More than 80% of USAA customers plan to renew their policies when they come due.
For our young driver driver profiles, USAA offers the best rates in our analysis. A male young adult driver profile could expect to pay $1,107 per year for their car insurance policy through USAA. The female profile has a study rate of $1,039 per year. Both are more than $400 below the average representative prices for our young adult driver profiles in our rate study of the nation's largest insurance companies.
Geico, a division of Warren Buffett’s Berkshire Hathaway, is one of the largest insurers in the nation. While its roots are in car insurance, it has grown to provide a wide array of insurance products, including homeowners, renters, motorcycle, ATV, boat, and RV coverage. Geico auto insurance is available in all 50 states and the District of Columbia.
In our ranking of insurance companies, Geico holds a spot in the top half of the list. Geico’s customers are generally happy with how the company handles car insurance policy claims. Most would recommend the company to others looking for auto insurance. Some respondents to our survey stated that their rates were too high and are continuing to go up. Geico's rates in our study are actually some of the lowest in the industry.
Geico is one of the cheapest insurers for our young adult driver profiles. Though everyone's rates may vary based upon numerous factors, our study shows a young adult male driver profile could expect to pay $1,120 per year and a female profile would pay $1,160. The study rate for the male profile is more than $400 below the national average for our young adult driver profile, while the female profile's representative price is about $300 below the national average.
Travelers Insurance asserts a distinction that no other auto insurance company can. They claim to have written the first car insurance policy in America – way back in 1897. Today, Travelers is a full-service insurance company, offering policies for personal, business, and specialty applications. They operate across the U.S., plus in several other countries around the world.
Our ranking of auto insurance companies shows Travelers in a position near the top of the list. Customer service during the claims process was a highlight for Travelers in the study. Few respondents gave the company low marks for their service. When it comes to value, fewer customers gave the company high marks, with only about two-thirds of customers being satisfied or very satisfied. Almost two-thirds of Travelers customers would recommend the company to someone seeking car insurance.
The company's representative rates for the young adult driver profiles in our survey aren’t the lowest in our analysis, but they’re still comparatively affordable. The young adult female profile in our study has a representative rate of $1,282 per year, while our sample male customer profile gets a study premium price of $1,372. Both representative rates are about $180 per year lower than the average of the nine companies whose rates we studied for our young adult driver profiles.
Founded in 1922 by a retired farmer, State Farm Insurance had its start as an auto insurance company. Now, it is a full-line insurer, offering personal and business policies including life, home, renter’s, identity theft, and commercial auto coverage. The company claims to insure more cars and homes than any other insurer in America. It operates in all 50 states plus the District of Columbia.
State Farm Insurance earns a spot in the top third of the auto insurance companies in our survey. Customers cite the ease of filing claims, the resolution of their claims, and the company's customer service. Some survey respondents cite their long tenure as State Farm as helping get the best rates and service. In our survey, the company fell down when it came to communicating the status of claims. About six in ten customers would recommend the auto insurance company to others.
Young adults looking for an insurance policy will likely find that State Farm does not have the lowest rates available, though they are better than average. The young adult female driver profile in our study could expect annual coverage rates in our study of $1,373, while a male profile's policy would likely be around $1,501. Those study rates are about $90 and $50 better, respectively, than the average price among the nine companies in our study.
Unlike many of the country’s largest auto insurers, American Family Insurance only sells car insurance in 19 states. It offers a full line of personal and business insurance, including homeowners, health, and life policies. The company was founded as an insurer for farmers in 1927.
American Family earned a spot at the bottom of our ranking of insurers, with poor survey results for claim filing satisfaction and claim status update. While it did receive high marks for customer service, only 41% of respondents said they were completely satisfied with the value the company delivers. When it comes to policy renewals, about 31% stated they were unlikely or very unlikely to renew their policies.
The young adult driver profiles we used in our auto insurance rate study will find representative rates at American Family that are a mixed bag. The study premium for the young adult female profile is about $100 below the average for the nine companies in our study. On the other hand, American Family's study rate for the young adult male profile is about $40 higher than the national average.
Car Insurance Discounts for Young Adults
When you leave your teen years and enter young adulthood, several potential auto insurance discounts will fall by the wayside. That student discount and money saved by getting good grades won't be available to you anymore. Neither will any discounts you qualify for as a covered driver on your parent’s multi-car policy. While some companies extend good student discounts to college students, once you graduate, that discount you get for being a good student will end.
There are, however, many auto insurance discounts that young drivers may qualify to receive. One of the biggest you can potentially be eligible for is a multi-policy discount. Most insurers will provide a substantial discount when you have your car insured with the same company you use for your renters or homeowners coverage. Merging your policies with a spouse or domestic partner may qualify you for a multi-car or multi-line discount. However, you should consider whether their driving record, credit score, or vehicle's characteristics will have a detrimental effect on your rates.
College graduates should check with their school’s alumni department to see if they have relationships with any insurance companies. Many alumni associations join with offer affinity discounts as a perk of being a member.
An affinity discount is where a car insurance company offers driver discounts to members, employees, or customers of an organization. Some examples that young drivers may qualify for include those discounts offered to people associated with auto clubs (such as AAA), credit unions, employers, or the military. Some insurance companies offer special discounts to customers with certain types of jobs, such as first responders, teachers, and nurses.
Allowing Vehicle Tracking
A growing number of insurers offer discounts to customers who agree to have tracking and driver behavior-monitoring devices installed in their vehicles. Not only do the trackers allow for usage-based premiums that are beneficial to young drivers who don’t spend much too much time behind the wheel, but they can also track instances of hard braking, rapid acceleration, and the number of times advanced safety technologies kick in. Young adults who have low-mileage each year and good drivers benefit the most from these tracking and pay-as-you-drive programs.
How Young Adults Can Save on Car Insurance
Qualifying for discounts isn't the only way young drivers can reduce the amount they pay for car insurance. Buying the right car, choosing the proper coverages, and setting appropriate deductibles are critical things to do upfront. Keeping a claim-free history with no at-fault accidents, watching your credit score, and being a good driver by avoiding moving violations (such as speeding) will help to keep your cheap car insurance cheap.
Choosing the Right Car
Different vehicles lead to various auto insurance rates. High-performance vehicles, luxury cars that are expensive to repair, and vehicles with high theft rates will cost more to insure than mainstream models. Contacting an insurance agent or getting an online quote before you buy can prevent you from locking yourself into purchasing a car that will cost you too much to insure.
Choosing Proper Coverages
Different young drivers need different levels of insurance coverages. Our guide to how much car insurance do you need steps you through the various available coverages and how to assess the level of coverage you need. It is important to note that different states require different levels and types of auto insurance coverage. Most lenders and leasing companies do as well, so they can be sure the collateral (your car) that is backing the loan is well protected.
Picking the Right Deductible
Having a super-low deductible you have to pay in case of an accident might sound like a great idea, but you need to balance the cost of the policy with the price you have to pay to get a low deductible. In many cases you’ll want to choose the highest deductible you can reasonably afford to pay, and that your lender and state allow.
Keep a Claim-Free Driving Record
One of the biggest drivers of high auto insurance rates for teen drivers is a high at-fault accident rate. If you’ve made it through your years as a learner and then teen driver with a clean driving record, your rates should go down dramatically as you become a young adult. By keeping your driving history clean, you can maintain the lower prices you have earned. Some insurance companies offer accident forgiveness for your first at-fault incident, but not all do. It's essential to read the fine print of any policy you are considering to see exactly what the accident forgiveness clause means to that insurer.
Pay Your Bills on Time
As you leave school and start your own household, it’s easy to miss a bill payment or two. If you want to keep your car insurance rates low, however, you can’t afford to miss any payments, especially those on credit cards or loans. In most states, auto insurance companies can use your credit score when setting your premiums. The lower your score, the more they can ask you to pay at premium time.
Don’t Get Traffic Tickets
It might seem obvious, but it’s important to avoid traffic tickets if you want to keep your car insurance costs low. Remember that violations you receive in rental cars, friend’s vehicles, out of state, or even on your bicycle can count against your driving record. Teen drivers who received citations during their early driving years will see their poor track record hold their rates high for their first few years as young adults.
More Car Insurance Buying Tools From U.S. News & World Report
The world of car insurance isn’t a place where most drivers want to spend a lot of time. A bit of knowledge, however, can save you serious money – both when you buy the insurance and when you have to make a claim. Our car insurance hub will lead you to articles on how car insurance works, coverages you need, car insurance discounts might qualify for, and the country’s best car insurance companies.
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