December 10, 2019

Average Car Insurance for 21 Year Old

Read more about Car Insurance

Turning 21 is a big milestone. But how will it affect car insurance rates? Read this guide to learn how much car insurance costs at age 21, and how to find the best policy.

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The average car insurance policy for 21-year-olds in the U.S. costs $3,646.42 per year. This figure is based on a 21-year-old male with a clean driving record driving a 2018 Honda Accord.

However, exact rates will depend on a variety of factors, especially location. In this guide, you'll learn:

Car Insurance for Young Adults
What is the average car insurance payment for:
A 20-year-old: $5,300/year
A 22-year-old: $4,100/year
A 25-year-old: $3,200/year

Car Insurance Rates by State

Car insurance premiums vary drastically based on where you live.

The states with the highest costs for 21-year-olds include:

  • Louisiana
  • Mississippi
  • Colorado
  • New York
  • Kentucky

The states with the lowest costs for 21-year-olds include:

  • North Carolina
  • Indiana
  • Wisconsin
  • Utah
  • Maine

StateAnnual Premium6-Month PremiumMonthly Premium
New Hampshire$3,064.56$1,532.28$255.38
New Jersey$5,890.80$2,945.40$490.90
New Mexico$2,880.38$1,440.19$240.03
New York$6,259.60$3,129.80$521.63
North Carolina$1,629.74$814.87$135.81
North Dakota$2,407.40$1,203.70$200.62
Rhode Island$4,486.80$2,243.40$373.90
South Carolina$4,634.00$2,317.30$386.17
South Dakota$2,409.80$1,204.90$200.82
West Virginia$5,825.82$2,912.91485.49

*Figures are based on a 21-year-old male with a clean driving record and a leased or financed 2018 Honda Accord.

The highest number of drunk driving fatalities was for drivers 21—30 years old. About 42% of those drivers had a blood alcohol level of 0.08%, according to a 2017 study.

Factors Affecting the Rates

Car insurers set rates based on how much risk your policy will entail. Higher risk individuals will be given a higher rate, while those considered lower risk will pay less.

Read on to learn more about the factors that determine your risk level.

  • Age
    Drivers under the age of 25 are twice as likely to get into an accident than drivers over 25. Since the chance of an accident is higher, car insurance will cost more for 21-year-old drivers.

Does car insurance go down after 21? From age 21, you can expect your premiums to decrease slightly each year, as long as you do not file claims or receive any tickets. This will continue until you turn 25 years old and gain more driving experience.

  • Driving History
    Insurance companies will offer lower rates to drivers with more experience behind the wheel. As you might expect, minimal accidents and tickets on a driver's record are also ideal for low rates.

  • Insurance History
    Insurers will run a claims history report to assess your risk level. With less than 2 claims filed, you are more likely to receive a favorable rate. If you have no prior history, companies can't estimate your risk level and may charge you more.

  • Credit Score
    Individuals with higher credit are generally considered responsible and will receive favorable rates. Because 21-year-olds and college students have shorter credit histories, they may pay more.

  • Vehicle
    The type of vehicle you insure has a large impact on rates, especially for 21-year-olds. High-value vehicles and those with turbo engines cost more, while older and safer vehicles cost less.

If you are looking to lease or finance a new car, look for vehicles on the Insurance Institute for Highway Safety's 2019 Top Safety Picks list. Safer vehicles are more likely to prevent accidents, and cost less to insure.

Coverage for 21-Year-Olds

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Choosing the right coverage is important since being underinsured may lead to out-of-pocket expenses. Buying more coverage than necessary can result in higher premiums.

Keep reading to see what coverage you may need at age 21.

Coverage for Others

If you are at fault for an accident, your insurance policy will pay for damages that you may have caused to another driver. Below we explain the different types of coverage your policy will provide.

Bodily Injury Liability
If the other driver is injured, your liability coverage will reimburse them for medical expenses, lost wages, and/or compensatory damages. In the event of a lawsuit, the liability coverage will also pay for your attorney

Coverage amounts are determined using a per person/per accident limit. For example, if your bodily injury coverage is 25/50, your policy will pay up to $25,000 per person and a maximum of $50,000 per accident.

Liability coverage is not optional, and most states require a minimum of 25/50. If you lease or finance your vehicle, you will be required to carry at least 100/300. Get enough coverage to protect your assets in the event of a lawsuit. This includes your home, vehicle, and/or income.

Property Damage
In addition to other vehicles and buildings, property damage can also cover public property like telephone poles or highway dividers.

Most companies automatically include $25,000. This may not be enough for a multiple-car accident or totaled vehicle. We recommended no less than $100,000 for property damage coverage.

Coverage for You

Uninsured/Underinsured Motorist
UI/UIM covers you if the other party is uninsured or doesn't have enough liability coverage to pay for your damages. This applies when you are involved in a not-at-fault accident.

If the other person has 25/50 in liability coverage, you will only be able to collect $25,000. Anything above their limit will be covered under your UI/UIM.

Choose the same amount of coverage that you have for your liability coverage. UI/UIM coverage cannot exceed your liability. If you want higher UI/UIM coverage, you will also need to increase your liability.

Personal Injury Protection
If you are injured as a result of a car accident, you will be covered under personal injury protection (PIP). In most states, PIP coverage will apply before your primary health coverage. PIP covers:

  • Hospital stays
  • X-rays
  • Transportation to/from doctor
  • Lost wages

Most states require every insurance company to provide a minimum of $50,000 in coverage. Ask your insurance agent if you are able to add additional coverage. Some companies provide up to $100,000 in additional PIP.

Coverage for Your Car

Collision Coverage
If your car is damaged as a result of colliding with another object (a car, home, tree, etc.), your policy will reimburse you for the cost of repairs.

Because your car depreciates in value the moment you drive it off the lot, insurance companies will consider depreciation when calculating your claim payout.

This coverage is subject to a deductible. Standard deductibles are:
  • $250.00
  • $500.00
  • $1,000.00
  • $2,000.00

The higher your deductible, the lower your rates will be. Choose a deductible that you are comfortable paying in the event of an accident.

If the cost to fix your car is greater than its value, the insurance company will declare the car a total loss and give you the market value of the vehicle.

For example, if your car's value is $4,500 and the cost to repair it is $6,000, the insurance company will give you $4,500, minus your deductible.

Do I need collision coverage?
If you lease or finance your car, collision coverage is mandatory. You do not need collision if you are able to afford the cost of replacing your car on your own in the event of a total loss.

If your vehicle is worth $3,500.00 and you have a $1,000.00 deductible, insurance will only pay for $2,500.00. It may not be worth paying for collision coverage at this point, since you will likely have paid $2,500.00 in premium in just a few years.

Comprehensive Coverage
This coverage will pay for damages to your car that result from fire, storm, theft, and vandalism. This coverage is also subject to a deductible.If you have full glass coverage, you can request reimbursement for damage to your windows without paying a deductible.

Comprehensive coverage applies in situations that are out of our control. Even if you are a safe driver or have an older vehicle, do not remove comprehensive coverage.

Rental Reimbursement
If your vehicle is involved in an accident, rental reimbursement will allow you to rent a car while your car is being fixed. This is especially beneficial if you travel to work or school and you do not have other transportation options available.

Car Insurance for College Students

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Insurance companies offer additional discounts for anyone presently in college.

These discounts are:

  • Good Student Discount
    If you have a B average or higher, you may qualify for a 2%-5% discount by submitting your most recent report card/transcript to your insurance agent.

  • Resident Student Discount
    If you plan on living on campus or at least 100 miles away from home, you may be eligible for an extra 2%-5% off.

  • Organization Discounts
    Many insurance companies offer an extra 2% discount for being a member of qualified organizations, including fraternities, sororities, and honor societies.

  • Education Discount
    When you graduate, make sure to update your education level on your insurance. Discounts for completing higher levels of education can be as high as 10% depending on the insurance company.

Other discounts you may want to look into include:

  • Defensive Driving Discount
    Most insurance companies offer a 10% discount for taking an approved, state-specific, 6-hour class. Courses are available online and in-person.

  • Safe Driving Discount
    Most insurance companies will give this discount to drivers who are accident- and ticket-free. This discount tends to increase slightly each year, until a maximum of 3-5 years.

If you are involved in an at-fault accident, the safe driving discount will likely fall off at your next renewal. To keep the discount on your policy and prevent your rates from going up, ask your agent about Accident Forgiveness.

  • Vehicle Safety Discounts
    The amount of this discount varies by insurance company, but is typically around 2%. You may be eligible if your vehicle has safety features installed, including:
    • Anti-lock brakes
    • Anti-theft device
    • Daytime running lights
    • Electronic homing device (e.g., LoJack)

How to Get Insured

Getting a policy is a fairly straightforward process. You should be prepared to offer information about your driving record and car. Follow the steps below to secure your car insurance policy.

  1. Get a Quote
    The insurance representative will likely ask for personal information, including:
    • Name
    • Address
    • Date of birth
    • Vehicle year, make, and model

    Read our detailed guide to getting a car insurance quote.

  2. Compare Insurance Companies
    Don't settle for the first quote you receive. Shopping around for insurance can help you find the best coverage for the best price. Try our comparison tool to get quotes from multiple companies.

  3. Choose the Effective Date
    When you are satisfied with your quote, choose the date you want your new policy to start. Make sure to cancel your existing policy on that same date to avoid any gap in insurance coverage.

  4. Make a Payment
    Most companies require at least 1 month's payment upfront. Be sure to have a credit/debit card or checking account handy when you start your policy.

Bottom Line

Car insurance for 21-year-olds costs an average of $3,646.42/year. Rates for 21-year-old drivers may seem high. However, you can expect a decrease in rates every year until age 25.

More from CreditDonkey:

How Much Does it Cost to Add a Teenager to Car Insurance

Average Car Insurance Rates by Age

Car Insurance for 18 Year Olds

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Do you really need to pay more for full coverage car insurance? Learn below if you need extra coverage, and see the cheapest prices.

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About CreditDonkey®
CreditDonkey is a car insurance comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

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