Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Aug 28, 2021

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Car insurance Q&A: “Does car insurance go down when you turn 25?”

Yes and no. Sigh…

There are thousands of insurance companies out there with almost unlimited ways of determining your insurance premium.

And there are likely a bunch of them that decrease car insurance premiums for those over the age of 25. But just as many could care less about your 25th birthday.

Insurance companies didn’t have a nationwide meeting and agree to reduce car insurance premiums for 25 year-olds…that’s a car insurance myth.

So don’t call your insurance agent from Chili’s during your 25th birthday dinner and expect your car insurance premium to go down!

How do auto insurance companies determine rates?

The first thing you should keep in mind is that an insurance company will look at a variety of factors when setting your auto insurance rates. In addition to your age, your gender, marital status, credit score, location, and driving record will all be factored into your premium.

Some of these things you have little control over — you can’t age out of the expensive age bracket by sheer force of will, and you probably won’t convince anyone to marry you for the auto insurance discount.

What you can do is maintain a clean driving record. Virtually every insurance provider looks at driving history as the biggest factor in a person’s risk profile. If you haven’t gotten into accidents or committed traffic violations so far, they figure you’re less likely to do so in the future.

As far as age goes, teenage drivers pay the most for auto insurance because they lack driving experience. As you age, you should see a steady decline in your rates.

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How much does car insurance drop at age 25?

The best thing about turning 25 is that you can look at the 21 year-olds and laugh because they “look like children.”

However, when it comes to car insurance, not much (if anything) may change.

Exactly how much your car insurance will go down is anyone’s guess. You might see a 5% decrease, or none whatsoever.

We can’t tell you that your auto insurance premium will drop “X” or “Y” percent because there are no hard numbers to back up such a claim.

And your premium certainly won’t change on your birthday (unless it coincides with your renewal date)…hey, there is a 1-in-365 chance that could happen!

Tip: If you just turned 25, you can shop around and see if other car insurance providers will offer you a lower car insurance rate, that way the savings associated with being 25 will be immediate.

Is there a “turning 25” auto insurance discount?

The point here is that there isn’t an outright “car insurance discount for turning 25.”

If anything, you’re simply a part of a new class of drivers, and are thus rated differently. And that new driver class may be deemed less risky, which should push your rate down to some degree.

But this may or may not have a material impact on your car insurance rate. Add to that the fact that things in the insurance world aren’t static.

If your insurance score has decreased or you’ve had a ticket or accident added to your record since your last renewal, your car insurance costs may actually increase!

So it’s not as cut and dry as some will have you believe.

For the record, you’ll get a much better deal on your car insurance if you get married than just by turning 25.

Why is car insurance higher for a person under 25?

At the end of the day, insurance is a numbers game…bottom line.

The short answer is because the group in question (those under 25) causes, and/or is involved in more auto accidents and receives more tickets than the average driver. Period.

The same goes for why car insurance is so expensive for teenagers.

You may ask what tickets have to do with it? Well, drivers with more tickets are more likely to get into accidents, at least according to the statistics.

Insurance companies keep track of every claim they have to pay for (because it is money they actually lose).

As a general rule, if you have insurance claims on your record, your car insurance will go up, no matter what your age.

[How much does car insurance go up with a claim?]

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Looking to save on your auto insurance coverage?

If the above information bummed you out, don’t fret. There are several ways to lower your car insurance rates regardless of age.

For example, if you’re part of a group that normally pays higher car insurance premiums, you may still be able to achieve a lower overall premium by maintaining continuous coverage, or being accident free for a specified period of time, perhaps three to five years

Additionally, you can call you current insurer or insurance agent and ask for a review of your policy to see if there are any missing or overlooked discounts, like the safe driver discount, good student discount, hybrid discount, and multi-policy discount

You might also ask your insurance company if they offer a telematics program, or usage-based insurance. These programs use a mobile app or device to monitor your driving habits and issue you a discount for being a safe driver.

Many insurers also offer a discount for those who take a defensive driving or other driver education course. Make sure you’re getting every discount applied to your auto policy that you’re eligible for.

If you already have all the discounts you can get, ask to have your auto insurance policy shopped with multiple different carriers. That will only  work if you have an independent insurance agent.

And if you use a captive agent, you’ll only be able to lower your premium by reducing coverage, which isn’t recommended.

So if you just turned 25, shop around and grab a few insurance quotes to be sure you’re getting the best deal out there.