Alyssa Lane
Auto insurance rates are determined by several factors, including age, gender, location, driving record, credit score, and claim history. In most states, auto insurance is expensive for teens and young adults due to their lack of driving experience and higher accident risks. As a result, insurance companies often require higher premiums to offset the potential costs of claims. The average annual rate for a 17-year-old with their own policy is $5,524, while adding a teen driver to a parent's policy increases premiums by an average of $3,726 per year. However, insurance rates gradually decrease as drivers age, with a significant drop at age 25, as the risk of accidents reduces.
| Characteristics | Values |
|---|---|
| Age to get auto insurance | In most states, you must be 18 or older to purchase a policy as it’s the age of majority in most states. |
| Age of majority | The age that the state you live in considers a child to have become an adult. Once a person reaches the age of majority, they can consent to medical treatment, sign a contract and vote. |
| Age of majority by state | The age of majority varies by state, but in all states and Washington, D.C., it is at least 18. Alabama and Nebraska put their age of majority at 19, and in Mississippi, it is 21. |
| Age restrictions by state | North Dakota and South Dakota have the youngest fully-licensed driving age of 16. Teens can begin getting their learner’s permit as early as 14 in Alaska, Arkansas, Iowa, Kansas, North Dakota and South Dakota. |
| Age when insurance rates go down | The cost of car insurance goes down by about 11% when you turn 25. |
What You'll Learn
Auto insurance for teens and young adults
Age Restrictions
The minimum age to sign up for your own car insurance policy depends on the state in which you live. In most states, you must be 18 to be able to legally enter contracts, but this can vary. For example, in Mississippi, you must be 21, and in Nebraska and Alabama, you must be 19.
Getting Insurance as a Minor
If you are a minor, you will need a parent or guardian to sign or co-sign the car insurance policy. In some states, a minor can get their own insurance policy if a guardian or parent co-signs, or if they are an emancipated minor. However, they can expect to pay a lot more for coverage than if they were on a parent's policy.
Strategies to Get Cheaper Insurance as a Young Person
- Stay on your parent's policy: You may be able to stay on your parent's policy as long as you live at home or are a student.
- Shop around: Compare rates from multiple insurance companies to find the best deal for the coverage you want.
- Drive less: Driving fewer miles can help you secure a lower premium as you are less likely to get into an accident.
- Keep a clean driving record: Building a driving history with no at-fault accidents or violations can help reduce your insurance costs over time.
- Reduce your coverage: Making policy changes, such as increasing your deductible, can decrease your premium.
- Take advantage of discounts: Insurance companies may offer discounts for good grades or taking a defensive driving course.
- Maintain good credit: Many auto insurance companies use a credit-based insurance score when calculating your premium, considering customers with good credit to be less likely to file insurance claims.
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Auto insurance for seniors
While auto insurance rates are generally highest for teens and young adults, they can start to creep back up once drivers reach their 70s. This is due to various factors, such as increased risk of accidents, as well as age-related factors like vision or hearing loss and slowed response time. However, there are ways for seniors to keep their insurance rates low and even take advantage of discounts.
Average Rates for Seniors
Seniors pay an average of $2,606 per year or $217 per month for a full-coverage car insurance policy. Rates vary depending on age, with 65-year-olds paying slightly less than 35-year-olds, while rates for 75-year-olds tend to be higher.
Ways to Keep Rates Low
- Stay accident-free: Avoiding crashes and moving violations will help you maintain a low rate.
- Enroll in usage-based programs: Some insurance companies offer usage-based programs, such as Snapshot® from Progressive, that measure driver behaviour and reward safe driving with lower rates.
- Reduce your mileage: If your insurer takes mileage into account, driving less can lower your rate since it reduces the odds of an accident.
- Consider your location: If you're planning to move, keep in mind that your rate may be higher in ZIP codes with increased crime and accident rates.
- Get a newer and safer car: Newer cars often have features like rearview cameras, blind-spot monitoring, and lane departure warning systems, which can help reduce your chances of an accident and lower your insurance rate.
Discounts for Seniors
While you may not find a senior discount based solely on age, there are still plenty of opportunities to save. Here are some common discounts to look out for:
- Bundling: Insurers often offer discounts for bundling your auto policy with other insurance products like life insurance, homeowners insurance, or renters insurance.
- Multi-policy: You can often get a discount by insuring more than one vehicle under the same policy.
- Good driver: Also known as a safe driving discount, this discount rewards drivers who have a clean driving record, with no violations or accidents for a set period.
- Safety features: Having additional safety features such as extra airbags and anti-lock brakes can earn you a policy discount.
- Anti-theft: Many companies offer discounts for having car alarms and other anti-theft devices installed.
- Accident-free: You can typically earn a discount by going for a set period without getting into a car accident.
- Telematics: Many insurers now offer app-based programs that monitor your driving habits and reward safe driving with discounts.
Specialty Car Insurance for Seniors
Some insurers offer special insurance packages designed specifically for senior drivers, which may provide better coverage and rates than general car insurance policies.
Best Auto Insurance for Seniors
According to MarketWatch, the following companies offer the best auto insurance for seniors, with a combination of affordable rates, quality coverage, and exceptional customer service:
- Travelers
- USAA
- Nationwide
- Geico
- Progressive
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Auto insurance rates by state
The cost of auto insurance varies depending on the state you live in. The national average cost for car insurance is $2,118 per year, according to Forbes Advisor's analysis of full-coverage car insurance rates. However, in New York, the average cost of car insurance is $4,769, while in Idaho, it is only $1,021.
Several factors contribute to the variation in auto insurance rates by state. One factor is the minimum state car insurance coverage and limits. Some states require only liability coverage, while others mandate additional coverages such as uninsured motorist coverage, medical payments, or personal injury protection. States with more stringent requirements tend to have higher auto insurance costs. For example, Texas has higher liability limits than its neighboring state, Oklahoma, and as a result, Texas's minimum car insurance costs are nearly $200 higher.
The number of auto insurance claims in a state also impacts rates. States with a higher frequency of severe weather events, such as hurricanes or tornadoes, tend to have higher insurance costs. For instance, Florida, which experiences extreme weather, has an average annual full-coverage car insurance cost of $4,326, while Ohio, with milder weather, has an average cost of $1,112. Urban states also tend to have higher insurance costs due to the increased risk of accidents and claims.
The cost of car repairs and medical care varies across states and influences insurance rates. States with higher repair and medical costs will have higher insurance rates to account for these expenses. Additionally, states with a higher frequency of lawsuits will have more expensive insurance rates, as settlements tend to be higher in these states.
When it comes to age restrictions for buying auto insurance, most states require individuals to be 18 or older, as this is the age of majority when individuals can legally enter into contracts. However, there may be variations depending on state laws and insurance company policies regarding minors signing contracts.
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Auto insurance discounts
Auto insurance can be expensive, especially for young and new drivers, who are statistically more likely to get into an accident. However, there are many discounts available that can help reduce the costs of insurance.
Good/Safe Driver Discounts
Insurance companies will often reward drivers for being responsible behind the wheel. This is usually defined as going a certain period without being in an accident or receiving citations for moving violations like speeding or driving recklessly. Some companies offer incentives for drivers to enrol in a safe driving app or program, which can also help lower your premium.
Student Discounts
Students enrolled in high school or college who maintain a certain average grade (usually a B or higher) can often save money with this type of discount. Good student discounts can sometimes be extended to students who are away at school, provided they only use the insured car during school vacations and holidays.
Anti-Theft Device Discounts
Having security devices such as an alarm or a tracking device installed in your vehicle may help you save on car insurance.
Paperless Discounts
Opting to receive policy documents in electronic format can often save you money.
Military Discounts
Some car insurers offer discounts to current or former members of the military.
Automatic Payment Discounts
Setting up automatic premium payments can sometimes result in a discount. This can be done through a debit or credit card, or via an electronic funds transfer (EFT).
Loyalty Discounts
Some insurers will offer a price break for renewing your policy.
Low-Mileage Discounts
Insurers may offer a rate tailored to your driving habits, including the number of miles you drive. This may involve an app or other device that can track your driving habits.
Bundling or Multi-Policy Discounts
If you purchase two or more insurance policies from the same insurer, you may be eligible for a multi-policy or bundling discount. This can also apply to insuring multiple vehicles through the same insurer.
Paid-in-Full Discounts
When policyholders pay their entire premium upfront, they can often receive a discount.
Defensive Driving Discounts
Taking a defensive driving course can lead to lower car insurance rates, depending on the insurer and where you live.
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Auto insurance for emancipated minors
Auto insurance is a necessity for all drivers, but the process of obtaining coverage can be more complicated for minors. While it is more common for teens to be included in their parents' insurance policies, there are situations where a minor may need to purchase their own insurance. In most states, you must be 18 or older to buy an auto insurance policy independently. However, if you are an emancipated minor, you can purchase auto insurance before turning 18.
An emancipated minor is a legal term for a minor who has been freed from the control of their parents or guardians, and the parents are no longer legally responsible for the child. Emancipation can occur through several means, including:
- Enlisting in the military (with parental consent)
- Getting married (usually with parental consent)
- Obtaining a court order from a judge (no parental consent required)
Auto Insurance Options for Emancipated Minors
If you are an emancipated minor, you can legally buy, register, and insure a vehicle in your name. This means that you can enter into a contract for auto insurance and are no longer subject to the same age restrictions as other minors. However, it's important to note that insurance rates for teens are typically higher due to their lack of driving experience.
To obtain auto insurance as an emancipated minor, you will need to follow similar steps as an adult:
- Research state laws and insurance requirements for your specific situation.
- Gather necessary documentation, including your driver's license, Social Security number, and vehicle information.
- Explore insurance options and compare policies from different companies.
- Consider the benefits of staying on your parents' policy, if applicable.
- Get quotes for a teen policy or an individual policy, depending on your circumstances.
- Evaluate and compare the coverage limits, deductibles, and premiums offered by different insurers.
- Finalize your insurance purchase by carefully reviewing and signing the policy with a parent or guardian, if required by your state.
While obtaining auto insurance as an emancipated minor is possible, it is important to carefully consider the financial implications. Emancipation comes with the responsibility of supporting yourself financially, and auto insurance can be costly for young drivers. Comparing rates and exploring discounts can help minimize the financial burden.
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Frequently asked questions
The minimum age to obtain auto insurance varies depending on the state and insurance company. In most states, the minimum age is 18, as this is the age of majority and the age at which one can legally enter into contracts. However, some states, such as North Dakota and South Dakota, allow teens as young as 16 to obtain a driver's license and may have lower age restrictions for auto insurance.
Minors can obtain auto insurance if a parent or guardian co-signs the policy or if they are emancipated minors. However, insurance companies typically do not write policies for minors, as they are not legally required to honor contracts signed by minors.
Yes, it is generally cheaper for young drivers to be added to an adult's policy, such as a parent's or relative's policy. This is because young drivers are considered riskier to insure due to their lack of driving experience and are often placed in a "high-risk" category, resulting in higher insurance premiums.
Auto insurance rates typically decrease as drivers age and gain more experience. Significant decreases in rates may occur at ages 19, 21, and 25. However, rates may increase again after age 70 due to factors such as physical, cognitive, or visual impairments that can affect driving ability.
