Car insurance rates seemingly go in only one direction – up. But premiums can also go down.
Age is one factor. Rates tend to decline from your teen years until your 70s. Your driving record and credit history are two other factors. If they’re not ideal, you can work to improve them, resulting in lower premiums over time. And, of course, car insurance discounts – such as bundling your auto and home policies – can lower your bill as soon as you qualify.
In other words, while some factors may be out of your hands, there are ways to reduce your auto insurance cost.
- Drivers aged 16 to 19 pay the highest insurance premiums due to increased accident risk and general inexperience.
- Car insurance rates decrease as you age, although some drivers in their 70s and older may see their rates increase.
- If your driving history is less than perfect, you may see your rates decrease in the future if you can avoid accidents and traffic citations.
- Improving your credit can also lead to an eventual rate drop because insurers in most states use credit-based insurance scores to evaluate financial responsibility and adjust premiums accordingly.
How age affects car insurance rates
Age is the most important factor that carriers use to price an auto insurance policy. Teenagers pay the most on average for car insurance due to their lack of experience behind the wheel.
“Teen rates are the most expensive because they have the highest accident rates as well as the highest accident fatality rates of any age group. They also have a high prevalence of distracted driving, such as texting while driving,” says Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple-I), an industry research and education organization.
Drivers aged 16 to 19 pay the most on average, a whopping $5,613 annually. Young adults, those aged 20 to 24, pay the next-highest rate on average, $2,976. Premiums start to decrease notably around age 25 as drivers gain more experience and accident rates decline. They continue dropping until the mid-70s when some drivers see their rates tick again.
Expert Tip
Some states don’t allow age or gender to be rating factors for car insurance.
- States that don’t allow age as a rating factor: Hawaii and Massachusetts
- States that don’t allow gender as a rating factor: California, Michigan, Hawaii, Massachusetts, Montana, North Carolina and Pennsylvania
According to Greg Martin, president of Think Safe Insurance in Brandon, Florida, senior drivers often experience physical changes, such as slower reaction times or decreased hearing and vision, which can increase risk.
“Statistics show that both seniors and younger drivers are more accident-prone than experienced middle-aged drivers, which leads to higher premiums,” Martin says. “The sweet spot for lower rates tends to be for experienced drivers in their 40s and 50s when driving habits are solid and risk is statistically lower.”
Consider the following data on average car insurance rates by age in the table below.
| Driver age | Average annual rate | Average monthly rate |
|---|---|---|
| Teens (16 to 19 years old) | $5,613 | $468 |
| Young adults (20 to 24 years old) | $2,976 | $248 |
| Adults (25 to 64 years old) | $1,903 | $159 |
| Seniors (65 to 75 years old) | $1,864 | $155 |
The impact of your driving record on insurance rates
Your driving record also dramatically affects how much you pay for car insurance. Good drivers – those without accidents or citations like speeding – pay the least on average. But even if you have a blemish on your record, you can become a better driver and lower your rates.
“Maintaining a driving record free from accidents, traffic violations and insurance claims can lead to lower insurance rates over time,” says John Espenschied, founder and agency principal for InsuranceBrokers.com. “Insurers often offer discounts to drivers who have remained incident-free for a certain period – typically three to five years. This demonstrates responsible driving behavior and reduces the perceived risk for the insurer.”
Remember that even minor insurance claims can suggest a higher likelihood of future claims, raising your rates over time. However, keeping a clean record should net you 10% to 30% savings on your policy, although the specifics can vary.
“Some companies might reduce surcharges tied to accidents or tickets after three years, while others reward long-term clean records with even larger savings,” Martin says.
However, premium penalties for incurring a DUI or speeding ticket are severe. In the table below, see how much drivers can expect to pay based on different scenarios.
| Hypothetical driver | Average annual rate | Average monthly rate |
|---|---|---|
| 18-year-old with no prior violations | $5,249 | $437 |
| 18-year-old with a speeding ticket | $6,623 | $552 |
| 18-year-old with a DUI | $8,804 | $734 |
| 18-year-old after an at-fault accident | $7,323 | $610 |
| 25-year-old with no prior violations | $2,259 | $188 |
| 25-year-old with a speeding ticket | $3,032 | $253 |
| 25-year-old with a DUI | $4,512 | $376 |
| 25-year-old after an at-fault accident | $3,516 | $293 |
| 40-year-old with no prior violations | $1,897 | $158 |
| 40-year-old with a speeding ticket | $2,573 | $214 |
| 40-year-old with a DUI | $3,835 | $320 |
| 40-year-old after an at-fault accident | $2,998 | $250 |
| 65-year-old with no prior violations | $1,742 | $145 |
| 65-year-old with a speeding ticket | $2,417 | $201 |
| 65-year-old with a DUI | $3,598 | $300 |
| 65-year-old after an at-fault accident | $2,844 | $237 |
The role of credit scores in car insurance rates
Your debt management record and history of timely bill-paying can also impact your rate. While insurers do not use FICO credit scores to rate your policy, most states will employ a proprietary credit-based insurance score – a rating based partially or fully on your credit information.
Actuarial studies suggest that how a person manages their financial affairs can be a good predictor of their likelihood to file insurance claims.
“This practice allows carriers to better match insurance premiums with the amount of risk that an individual customer might pose,” Friedlander says. “The goal is to minimize the possibility that customers with lower risks might subsidize rates for those with higher risks.”
Expert Tip
Some states don’t allow credit history to influence your car insurance premiums.
- States that prohibit using a lack of credit history as a factor for premiums: Alabama, Delaware, Florida, Illinois, New Mexico, Oklahoma, Texas, Vermont and Washington
- States that don’t allow credit score as a rating factor: California, Hawaii, Michigan and Massachusetts
In other words, If your credit could be better, work on improving it. You may see your car insurance rates drop as a result.
Below, you’ll find sample rates based on good, fair and poor credit.
| Rating period | Good credit | Fair credit | Poor credit |
|---|---|---|---|
| Monthly | $160 | $190 | $281 |
| Semi-annual | $958 | $1,138 | $1,689 |
| Annual | $1,915 | $2,275 | $3,377 |
How to make your car insurance cost go down
You can lower your auto insurance rate regardless of age or driving record. Take advantage of one or more car insurance discounts your carrier provides or consider adjusting the coverage or type of policy you carry.
Some common ways to save on car insurance include:
- Bundling your home and auto insurance policies. Depending on the insurer, a multi-policy discount can lead to savings of up to 20% or more.
- Signing up for a usage-based insurance program. Martin says that programs like Progressive’s Snapshot, Travelers’ Intellidrive and AAADrive track your driving habits and can yield rate savings. Depending on the carrier, discounts can range from 5% to 30%.
- Reducing your annual mileage. Driving less, usually under 7,500 miles per year, reduces your risk exposure, which can lower your premium, Espenschied says. A pay-per-mile car insurance policy may be cheaper than a standard policy.
- Adjusting your coverage. If you drive an older vehicle that is paid off, full coverage car insurance may not make financial sense if repairing or replacing your vehicle would cost more than its actual cash value.
- Taking a defensive driving course. Older drivers, in particular, may benefit from taking an online or in-person safe-driving course. Doing so may result in a savings of about 15% on your premium for up to three years. Several states require insurers to offer this discount but it’s not available everywhere.
Frequently ask questions
At what age does car insurance go down?
Vehicle insurance rates begin to decline at age 20 and then drop again at age 25 as drivers gain more experience and their accident risk declines. On average, drivers in their 40s through 60s pay the lowest rates.
Friedlander says senior drivers older than 70 may experience a slight uptick in their rates due to higher accident risk and a higher probability of medical treatment needed for accident injuries.
When I turn 25, will my car insurance go down?
For many young drivers, turning 25 results in a noticeable drop in rates because they move into a lower-risk category. However, the rate decrease is based on other factors, including your carrier, coverage amounts, the type of car you drive, where you live, etc.
Does car insurance go down when a car is paid off?
Paying off an auto loan or lease does not directly impact the rate you will pay. However, it removes lender requirements for comprehensive and collision car insurance, meaning you can drop them and spend less on your premium.
Resources & Methodology
Methodology
CarInsurance.com commissioned Quadrant Information Services to provide data for single, 40-year-old male and female drivers of a 2023 Honda Accord LX with good credit and no violations on their record for full coverage insurance policy with liability limits of 100/300/100 and a $500 comprehensive and collision deductible.
In addition, we also calculated rates for these hypothetical drivers, but with one or more of the following on their record: speeding ticket, at-fault accident, DUI/DWI, poor credit history or a lapse in coverage. We analyzed more than 53 million quotes, over 34,000 ZIP codes and 170 insurance companies nationwide.
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