Auto Insurance Costs For 21-Year-Olds: What To Expect

Auto insurance for 21-year-olds can be expensive, with rates higher than the national average. This is because insurance companies consider young drivers to be high-risk, as they have less experience on the road and are more likely to be involved in accidents. The cost of insurance for 21-year-olds varies depending on factors such as location, vehicle type, and insurance company, but there are ways to find cheaper rates.

Gender as a Rating Factor

In most states, gender is a factor in determining auto insurance rates, with males paying significantly more during their teenage and young adult years. This is because male drivers are statistically more likely to be involved in accidents, speeding, and DUI convictions. They are also less likely to wear a seatbelt and are more likely to drive a car that is more expensive to insure. As a result, insurance companies view young male drivers as riskier than young female drivers and charge them higher premiums.

However, this gender-based pricing is not uniform across all states or insurance companies. Some states, such as California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania, have banned the use of gender in determining insurance rates. In these states, insurance companies are required to use unisex rates or offer a third gender option on official documents.

The impact of gender on insurance rates also varies with age. While young male drivers pay more than their female counterparts, this difference decreases over time. Around the age of 30, rates for males and females even out, and by age 50, females may even pay slightly less.

It is worth noting that recent studies have challenged the belief that women pay less for auto insurance. The Consumer Federation of America (CFA) found that in some states and insurance companies, women are charged more than men, even with a good driving record.

When it comes to transgender and non-binary individuals, the data is limited, and it is unclear how insurance rates are determined for this population. However, some insurers have discontinued the use of gender as a rating factor, and others now offer additional gender options on insurance applications.

While gender plays a role in insurance rates, it is just one of many factors considered by insurance companies. Other factors, such as driving record, location, age, credit score, and vehicle type, also significantly impact the cost of auto insurance.

Cheapest Companies for 21-Year-Olds

Car insurance rates for 21-year-olds are based on several factors, including driving history, location, gender, marital status, and credit score. The cost of car insurance is generally high for this age group because they are considered high-risk drivers with less experience and a higher likelihood of accidents.

USAA

USAA offers the cheapest rates for eligible members, including military personnel, veterans, and their immediate families. Their average rates for 21-year-olds are $62 per month for minimum coverage and $218 per month for full coverage.

Country Financial

Country Financial provides the cheapest rates available to all 21-year-olds, with $79 per month for minimum coverage.

Travelers

Travelers offers affordable rates for full-coverage insurance, with an average of $219 per month for 21-year-olds.

GEICO

GEICO is another excellent option, with an average annual cost of $1,824 for 21-year-old drivers. They also offer various discounts, such as good student and defensive driving course discounts.

Auto-Owners

Auto-Owners Insurance is worth considering, especially if you don't qualify for USAA coverage. They offer competitive rates, with an average annual premium of $2,871 for 21-year-olds on their own policy.

State Farm

State Farm is a good choice if you're looking for a balance of coverage and affordability. They offer various discounts, including good student and safe driving course discounts.

Erie

Erie Insurance is available in 13 states and Washington, D.C., and offers rates starting at $179 per month for full coverage. They provide discounts for safe drivers, good students, and those who don't drive often.

While these companies offer competitive rates, it's important to compare quotes from multiple providers, as rates can vary based on individual circumstances. Additionally, consider taking advantage of discounts and maintaining a clean driving record to further lower your insurance costs.

Full vs Minimum Coverage

The cost of car insurance for a 21-year-old varies depending on the type of coverage they choose. The average cost of full coverage car insurance for a 21-year-old is $4,333 per year, while the average cost of minimum coverage is $1,250 per year.

Full coverage car insurance includes both liability insurance and protection to cover damage to your own vehicle. Liability insurance covers the cost of injuries to other people and damage to other vehicles or property when you are at fault in an accident. On the other hand, minimum coverage, also known as liability-only insurance, only covers damage to other vehicles or injuries to other people when you are at fault.

While full coverage may cost more, it can provide valuable protection in the event of an accident. It is important to consider your own financial situation and needs when deciding between full and minimum coverage. If you cannot comfortably afford to replace your car if it is destroyed or stolen, full coverage may be the better option. Additionally, if you lease or finance your car, full coverage is often required by lenders.

Discounts for Young Drivers

Young drivers are often charged higher rates for car insurance due to their lack of driving experience. However, there are several discounts available that can help reduce the cost of insurance for young drivers. Here are some of the most common discounts offered by insurance providers:

• Good student discount: Students who maintain a "B" average or a 3.0 GPA can often get a discount on their car insurance. This discount is usually available to students under the age of 25.
• Defensive driving or driver's education course discount: Taking a defensive driving or driver's education course can help lower insurance rates for young drivers. These courses teach techniques for handling emergencies, managing stressful driving situations, and anticipating potential hazards.
• Student away from home discount: Many insurance companies offer a discount for students who are away at college and not driving a car.
• Safe driver discount: Young drivers who maintain a clean driving record without any accidents or speeding tickets may be eligible for a safe driver discount.
• Low-mileage discount: Pay-as-you-drive or pay-per-mile insurance can reduce rates for young drivers who don't drive frequently.
• Multi-car discount: If a young driver has their own vehicle, some insurance companies offer a discount for having multiple cars on the same policy.
• Good driver discount: If a young driver has not been in an accident or received any traffic violations in a certain number of years, they may be eligible for a good driver discount.
• Vehicle safety discount: Insurance companies may offer a discount if a young driver's car has safety features such as airbags, anti-lock brakes, and anti-theft devices.
• Affiliation discounts: Young adult drivers may be eligible for discounts if they are military members, federal employees, or graduates of certain universities.

In addition to these discounts, young drivers can also save money on car insurance by comparing quotes from multiple insurance companies, choosing a higher deductible, and bundling their car insurance with other types of insurance, such as homeowners or renters insurance.

Average Cost by State

The cost of car insurance for 21-year-olds varies significantly by state. The average cost of car insurance for a 21-year-old in the United States is $274 per month for a full coverage policy. However, the cost can range from as low as $81 per month in North Carolina to as high as $244 per month in Florida.

In Florida, the average cost of full coverage car insurance for a 21-year-old is $438 per month, with State Farm offering the cheapest rates at $267 per month. On the other hand, in North Carolina, the average cost is much lower at $179 per month, with Erie offering the cheapest rates at just $81 per month.

Other states with relatively high car insurance rates for 21-year-olds include New York, where the average cost is $712 per month for full coverage, and California, where the average cost is $552 per month. In contrast, states with lower average rates include Virginia at $256 per month and Ohio at $263 per month.

It is worth noting that the cost of car insurance for 21-year-olds can also vary depending on their living situation. For those who live with their parents, the average cost of car insurance is lower, with an average annual cost of $3,506 for full coverage and $1,044 for minimum coverage when listed as a driver on their parents' policy.

Frequently asked questions