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Why Young People Pay More For Their Car Insurance


It is a well-known and largely accepted fact that young people pay more for their car insurance than older drivers. This is down to a couple of factors: one is that young people are, well, young and another is that they tend to have less driving experience than older people.

Inexperience and risk

One of the main reasons young people end up paying more for their car insurance is because they are inexperienced. No matter what age you are, the less driving experience you have then the less information the car insurance company has to go on when they are coming up with a quote for you. This means that they are likely to err on the side of caution and ask you to pay more as even if you are the safest driver in the country, they don’t know that.

Plus, young people as drivers are statistically riskier than older and more experienced drivers. Again, this can be linked back to their relative inexperience. They don’t have as much experience of driving and so are more likely to make the wrong judgment call than other drivers, which can lead to dangerous situations – and costly insurance claims. There’s also a general assumption that young drivers are more likely to be impatient when it comes to driving and drive faster and more recklessly than older drivers, which bumps up the risk of them making an insurance claim and so means that their premiums are higher.

Of course, this means that young and inexperienced drivers who are perfectly good at driving and entirely safe on the road end up being penalized, but when car insurance companies have nothing but the statistics to go on, it isn’t hard to see why the young end up paying more.

Keeping insurance costs down

However, there are a few things that young people can do to help keep their car insurance costs to a minimum – and reduce them over a period of time. Probably the main thing they can do is drive safely. The longer you drive without making an insurance claim, the less you have to pay for your insurance as you’re no longer seen as such a risk. It can take a couple of years for this benefit to kick in on your insurance, but it’s certainly worth it in the long run so hang on if you can.

If young people only drive on an occasional basis, they might also be able to pay less for their insurance as the less they’re on the road, the fewer chances they’ll have to be involved in an accident. So take a look at your driving habits and ideally only do it when absolutely necessary.

Your choice of car and insurance policy can also have a significant impact on how much you pay. For instance, if you have a really nice car then it’s worth paying the extra premiums that come with insuring it. However, if your car is old and not worth very much, as long as it’s safe to drive you might not need to get fire insurance for the car as it wouldn’t be worth it anyway. It might only make a small difference to the cost of your insurance, but it’ll certainly help.

Do you remember paying an obscene amount for insurance when you were young? When did you notice your rates going down severely? Was it age 25, or later?

This has been a guest post from James. I hope you enjoyed it!

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My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. It is still too high! I think we are feeding ungrateful industry anyway.

    Yes you right the rates went down at 25 dramatically, than 5 years in row they were almost the same and since than..only going up. Even at $ 40 a months, we have already bought a second car somebody….

    • It was hard for me to tell if my insurance went down much since I moved to another state just after I turned 25. It seemed like it did make a difference though – I haven’t seen any drastic change since I got here.

  2. I got really cheap car insurance by saying to them that I was a 35 year old married man with a home that had a garage and a car alarm. At the time I was 25… very single and garage was anywhere I could find a spot in the streets on New York.

    • Jai – that is incredibly dishonest. I would certainly never suggest that anyone do the same thing. It’s really not worth saving $50 a month. Character is much more important.

  3. I would absolutely charge my younger self higher rates. I was a total knucklehead!

    • Yep. I would too! I had a couple of accidents and some speeding tickets. Irresponsibility definitely plagues the younger peeps.

  4. We’re learning this lesson first hand, my 18 year has been hit twice and even though it has not been his fault, our insurance has gone way up. The second accident just happened and he was hit by a driver with a suspended license and no insurance – certainly another reason we all pay more!

    • Eek! Kids and their accidents….

  5. Mine did lower incrementally when I hit 25. It decreased a lot more for me when I got married (at 23). I am assuming that insurance companies categorize married males as more responsible than unmarried males? Who knows…but I will take the savings.

    • Getting married does imply a sense of responsibility I suppose!

  6. I was on my grandparents’ policy until a year or so before I got married so it was not too expensive. But we NEVER got the decrease everyone said would happen- even though we didn’t have any accidents, tickets, etc.

    When my wife turned 25- nothing. When I turned 25- nothing. When we turned 30- still nothing. Even at 35- no change. Very disappointing.

    Agent couldn’t give us any good reasons, either. Maybe it’s just where we live…who knows.

    • Wow. That is dissapointing. Did you shop around at other places?

  7. If you drive older vehicles, don’t get tickets and don’t turn in claims, you are the “ideal driver”. We carry high deductibles on all our vehicles as well. I have also heard, but can’t prove, your rates are determined by your credit score; there have been lots of arguments about this policy.

    • Yep. That would be a good way to keep those rate low! Good tips.

  8. Yes experience maybe a big one for higher rates when you have less experience. I find that from province to province, the rates in Canada vary a lot. Also between large cities and small towns, the rates vary a lot as well.

    • Yeah – a lot of it does depend on where you live. Crime rates and the number of claims are definitley contributing factors. Those that are young still pay the higher rates though.

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