In general, auto insurance companies tend to offer lower premiums once an insured driver has turned the age of 25.
Don’t expect a birthday card from your insurer and immediate reduction in your rates though. Car insurance providers don’t typically change your rates mid-policy term (unless you make changes like add a car, driver, etc.), so you’ll have to wait until your next renewal period to see a lowering of your premium.
Why the drop of rates at 25? It’s not arbitrary; car insurance providers know that statistically young drivers are shown in reports by organizations such as the Insurance Institute of Highway Safety (IIHS), National Highway Traffic Safety Administration (NHTSA) and Center for Disease Control and Prevention(CDC) to be more prone to accidents due to immaturity and inexperience at operating a vehicle.
Risk assessors have determined that those 25 or older are more inclined to be more responsible and that their risk of at-fault accidents has decreased. So the base rate for your car insurance policy changes at this age because you’ve matured into a better driver class; it’s not a discount for turning 25 as some believe.
Marital status, age, gender, years of driving experience and accident statistics normally are used to classify drivers. Insurance companies rating systems and factors can differ, as well as the state laws governing them, so how much your car insurance rates will change will differ.
We have seen rates lowered as much as 20 percent once a driver reaches the age of 25, if that individual has kept a clean driving record and had no accidents.
While it is typically true that auto premiums will be reduced when you’ve reached your 25th birthday, if other factors about you have changed – your car, where you live, driving record, claims history, etc. – your rates could stay the same, or go up, due to these factors.
If you don’t see a noticeable drop in your rates after you’ve turned 25, ask your auto insurance provider why.
It may be that you’re with a company, such as Esurance, that instead of giving one big rate reduction at age 25 they continually lowers rates every policy term as the young drivers they insure get older and have shown to be good drivers with no accident claims or traffic violations.
Even if you do see a decent premium reduction, it’s still a critical time to shop around and make sure you’re getting the best rate possible. There may be some insurance companies in your area that didn’t offer coverage to drivers under 25 that you will now find give you the cheapest annual car insurance rates.
If you live outside of the U.S., then the age at which rates are lowered may be older, such as 30 years of age, so check with your insurer to find out about their rating system and driver classifications.