The Best Cheap Car Insurance and Average Costs for 20-Year-Olds

It can be challenging to find reasonable car insurance rates for young drivers. Even in your early 20s, car insurance can be expensive, especially on an individual plan. Drivers in this age range have more experience behind the wheel than they did when they first got their license as a teenager, but in the insurance company's eyes, 20-year-olds are still considered high-risk compared to older drivers. However, there are strategies to help you save money on car insurance.

Drivers who are 20 years old will pay less than 16-year-old drivers and recent high school graduates, but they still pay more than the national average than almost every other age group. If you can, consider keeping your 20-year-old on your family car insurance policy. The average annual cost of an individual policy for a 20-year-old is $2,465. However, companies vary in what they offer and what they charge, so finding the best car insurance company for your needs is important.

Insurance companies use your driving record as the biggest determinant of your auto insurance rates. They also consider how much you drive your car, your age and where you live, amongst several other rating factors, when they figure out how much to charge. Young males often pay more than females because young males are more likely to engage in risky behavior behind the wheel and have a higher incidence of at-fault accidents. The best cheap companies for brand-new drivers may vary depending on where you live, so be sure to shop around.

Some states prohibit insurance companies from considering gender:

• Hawaii
• Massachusetts
• Montana
• North Carolina
• Pennsylvania
• California

If you live in any other state, rates are likely to be higher for a 20-year-old male over a female of the same age. Rates can also vary quite a bit from company to company. While the average cost of a policy for a 20-year-old driver is $2,528, rates range from a low of $2,180 with Allstate to a high of $3,038 with Nationwide.

Younger drivers often consider the coolness factor of a car and how much fun it is to drive when choosing a vehicle. They may be beyond driving their parents' hand-me-down vehicles and eyeing something sleek and fast like a Ford Mustang or Chevy Camaro. However, driving a sports car is going to significantly increase rates over driving a more practical vehicle. Therefore, 20-year-olds and their parents should think about things like safety ratings and affordability of car insurance. Several cars that fit the bill of safety and affordability to consider are:

• Toyota Camry
• Toyota Rav-4
• Buick LaCrosse
• Chevy Traverse
• Kia Soul

These cars are more affordable to insure and have good safety ratings, making them a good choice for a 20-year-old driver.

Adding your 20-year-old driver to the family policy is the easiest way to save on car insurance, and it offers the most significant savings. Adding a 20-year-old to your policy will increase the premiums if they aren’t already on your policy, but it’s still much cheaper than getting an individual policy.

Another way to save money is to compare auto insurance rates. Depending on what area of the country you live in, different companies may have the cheapest rates. Don’t be afraid to switch companies if it means significant savings. Insurance companies are counting on the fact that once you sign a policy with them, you’re less likely to shop around. The Insurance Information Institute (Triple-I) suggests getting quotes from at least three companies. MoneyGeek’s comprehensive study on insurance rates revealed that getting a policy with the lowest-quoted company for a 20-year-old would save an average of 28% as compared to using the company with the highest quote.

Your 20-year-old driver likely has some experience now, but a clean driving record is still imperative to get the best rates on car insurance. If you live in California, the cost of your teen getting just one speeding ticket will raise your rates by $1,242 a year. And if your teen gets caught driving under the influence, your insurance rates could double overnight.

As a parent, you should model good driving behavior. Don’t glance at your phone, text while driving or talk on a mobile phone that is not hands-free, don’t speed and don’t drink and drive. Impress upon your 20-year-old how much money they can save and how many injuries they can prevent by driving safely.

If you are a 20-year-old who is a good student, look into good student discounts. For example, GEICO offers a 15% discount for full-time students with at least a B average. You may also get a discount from car insurance companies if you are a student away at college without a car.

Look into defensive driving course discounts as well, although not every company offers a discount for these courses. State Farm recommends you contact your agent for a list of qualifying courses, so it pays to check before you sign up. On the other hand, even if your company doesn’t offer a discount, a defensive driving course is always a good idea. It will teach safe driving skills and pay off for years down the road.

There are also telematics-based safe driving programs for young drivers you may take advantage of to earn a discount. Examples include State Farm's Steer Clear and Allstate's teenSMART.

All states (except for New Hampshire) have minimum liability requirements for car insurance. These are the bare minimum, so you'll probably want more coverage than just these amounts for a greater level of financial protection from at-fault accidents.

If you own a car that is only worth a few thousand dollars, you could go with just liability-only car insurance, forgoing collision and comprehensive coverage, optional coverages that protect your vehicle and make a policy full coverage. You’ll have to pay for repairs and damage to your car out-of-pocket, though, with only liability.

Plus, where you live may require more than liability coverage, such as personal injury protection or medical benefits and uninsured and underinsured motorist (UM/UIM) coverage. If required, you may decide to choose the lowest amount of coverage to save money.

Also, consider increasing deductibles, as this will also save some money. You can have different deductibles for comprehensive and collision coverage, and raising just one or both can lower your car insurance costs. Just make sure you have the amount of the deductible handy in case you get into an at-fault accident. And remember, liability coverage does not have a deductible.

The type of car your 20-year-old drives will also affect insurance rates. Some cars are expensive to insure because they are expensive to repair, and some are more expensive because they lend themselves to risky driving.

The MoneyGeek team found that driving a flashy sports car increased premiums anywhere from hundreds to thousands of dollars in every state.

Car insurance is expensive for a 20-year-old driver because, while they do have some experience under their belts, they’re still fairly new at driving and are considered high-risk by insurers. A 20-year-old is just a couple of years removed from their teenage years, and although teen drivers make up just 14% of the population, they’re responsible for 30% of the costs of vehicle injuries. When your 20-year-old reaches 25 or so, car insurance premiums become more reasonable.

Drivers ages 20–24 suffer 2.15 fatal crashes for every 100 million miles driven, and there are 572 total crashes in this age group, according to police-reported crashes from 2014 to 2015. This is almost a third less than the total crashes of teenagers.

While there are fewer deaths per capita for teens and young adults, these age groups are still at a higher risk for accidents because there are more fatal deaths per capita per annual miles driven. Drivers ages 20–24 suffer more deaths per 100,000 drivers than almost any other age group. Drivers ages 20–24 drive quite a bit, but they are still relatively inexperienced, leading to more crashes. They are still more likely to underestimate dangerous situations and have just enough experience to make them overconfident. However, they are almost half as likely to suffer a fatal car crash than 19-year-olds, according to data from the Insurance Institute for Highway Safety and the U.S. Department of Transportation.