The insurance cost for young adults is quite staggering; they have the second-highest auto insurance rates recorded after teenagers in the U.S. According to one of the five top insurance companies, the insurance cost for a young adult is approximately $2,200 for a full year of coverage, which is almost $700 more each year than the insurance rate for a 40-year-old driver.
Why Is Car Insurance Expensive for Young Adults?
Young adults between the age of 20 to 24 have more accidents than any other drivers after teenagers. According to the recent data by Insurance Institute for Highway Safety (IIHS), young drivers such as teenagers are more risk-takers, such as speeding or not wearing a seat belt, and inexperienced drivers than any other age group.
According to the IIHS statistics of 2018 accidents, approximately 42% of the drivers killed were among the age 0f 21 to 30 due to alcohol consumption above the legal limit. Moreover, teenagers tend to cross the speed limit more than any other age group drivers. IIHS also states that young adults who are in front seats don’t wear seat belts. As the age of drivers increases, the driving behavior tends to get better.
If you are a young adult, you can lower your insurance cost by the below-mentioned guidelines.
1. Drive Safely
Follow the rules if you want to avoid accidents. Avoid driving if you had a drink. It is a simple precaution to follow, and it can save you hundreds of dollars each year with a clean driving record. According to insurance companies’ statistics, after every one speeding ticket, a young driver pays 25% more for the full insurance coverage whereas 50% more each year for full coverage after an accident. If you want to have less expensive insurance, you need to stay free from speeding tickets or accidents.
2. Look Around for More Options
Insurance companies consider many factors in determining your insurance rate. In addition to age, other factors considered are your gender, location, your car’s make or model. But every insurance company weighs each factor differently in determining insurance rates. Hence it is crucial to get multiple insurance companies’ quotations to find the best rate for you. Also, at least compare your rates three times each year with other insurance companies that provide the same coverage.
Discuss with your insurance agent for the discount that you might avail. You can also get discounts if you bundle your insurance policies and buy them from the same company. Young adults who live with their parents can save by remaining on their parents’ insurance policy rather than having their own. Young adults can also avail discounts if they live far from home, achieve a decent grade, or complete a driver’s education.
4. Nontraditional Car Insurance
If you know you won’t drive much in the foreseeable future, you don’t need to pay for the full-year coverage. You can choose pay-per-mile insurance, where the rates depend on how many miles you drive. Similarly, you can consider usage-based coverage if you are a safe driver. The coverage uses an app that tracks your driving behavior, such as hard braking or speeding, to determine discounts’ eligibility. Many traditional companies offer both options, whereas few companies deal only in nontraditional car insurance.
5. Build Your Credit
In the majority of states, insurance companies use credit scores to determine your auto insurance rate. The credit score is evaluated based on your payment history or outstanding debt. Similar credit scores are considered when determining the credit card or loan but weighed differently. However, it is not allowed in Massachusetts, Hawaii, California, or Michigan. According to the statistics, drivers with poor credit scores pay 74% more for yearly coverage.
How to Improve Your Credit Scores?
- Pay your monthly bills on time.
- Clear your credit card payments.
- Get a free credit card report to analyze your credit scores.
- Keep your credit card utilization below your card limit.