The Gen Z Insurance Guide for Ages 17-27

If you were born between 1998 and 2013, you are called Gen Z or Zoomers. You range in age from 11 to 26 years old and have puzzled marketers. A lot of insurance companies spend money and time trying to figure out how to reach you as a consumer, especially if you qualify for car insurance. But what do people under the age of 27 really need to insure?

We know that as a demographic, more than half of 18- to 24-year-olds in America are living with their parents. ^[5] You’re inclined to do your research to make the best decisions, especially with so much advertising and information being aimed at you, so here are some truths about which insurance products you need and which you really can do without.

Here’s the ultimate insurance guide for Gen Z.

Key Takeaways Some types of insurance are absolutely necessary, like health insurance, car insurance and renters or homeowners insurance. Workers compensation is required if you have a business that employs workers other than yourself. Life insurance can help you create wealth against which you can take out low-interest loans, for a business or home improvements.

Health Insurance

The great thing about being Gen Z is that you can stay on your parent’s health insurance plan(s), until you turn 26. The problem is that not everyone’s parents have health insurance.

If you’re uninsured and your parents don’t claim you as a dependent anymore, you can find low-cost health insurance in the health insurance marketplace. In fact, if you are on your parent’s health insurance policy and turn 26 while it’s not Open Enrollment season, you can still buy a policy because turning 26 is considered a Special Enrollment Period.

You can find a subsidized health plan that costs less than $40 a month, depending on your income and where you live. It’s worth seeing what you qualify for, and it’s free to compare health plans. If you have an income that disqualifies you from a subsidized plan, you can still find a cheap one using the same comparison site.

If you’re healthy and have no chronic conditions, you may get by with a high deductible bronze plan. Really, you’re just buying a health plan in case you have an accident and get injured or unexpectedly fall ill. Hospital and surgery bills are not something you want to take on, so being prepared with a low-cost health insurance policy is a good way to stay out of medical debt.

Of course, not all young people are healthy. If you have a chronic condition that requires regular doctor visits and medications, you’ll probably save more money with a plan that is a little more expensive but has more benefits and lower copays and deductibles, possibly a higher tier plan, like a silver or gold plan.

According to the Pew Research on Gen Z, 57% of you are enrolled in college, so compare the cost of your school’s health insurance versus a marketplace plan before you buy any policy. Also compare coverages and out-of-pocket costs like copays to see which is more economical as a whole.

Car Insurance

According to the US Centers for Disease Control and Prevention, motor vehicle crashes are the second leading cause of death among American teenagers. On average, eight teens a day died in car crashes in 2020, and hundreds more were injured. Teen drivers are nearly three times as likely as older drivers to be involved in a fatal crash.^[1]

For this reason, drivers aged 16 to 24 see the highest car insurance rates, which drop significantly around age 25, unless they have an accident or file a claim. If lucky (and still living at home), being on a parent’s car insurance policy is probably the cheapest way to go. Once you move out, however, you’re fresh out of luck. Worse yet, if you have a low credit score and it’s used in the state you live in, you might get a higher rate.

If you have a roommate or roommates, their bad driving habits and low credit score will ding your rate too, unless you exclude them on your policy. If you do that, you better not lend them the car because if they have an accident while excluded, the insurance company will give you zero dollars.

As a whole, Gen Z is struggling with low wages, high prices on just about everything and the cost of education. Even if you’re doing well financially, inflation is causing everyone’s bills to increase, so it’s important for you to make sure you’re not paying more for car insurance than you need to.

Comparing rates is the best way to find the lowest rate. More than any other age group, Gen Z is comfortable using the Internet to find the best deals, so shopping for insurance should be no different.

Some insurers are more reasonable when setting rates for teens and young adults. Also, discounts, like a good student discount (if you’re still in school), go a long way in lowering rates so it’s important to ask. Typically, you need a B grade point average to qualify, a great incentive to keep your grades up! Also, if your school is more than 100 miles away from your home, you could qualify for what's known as an "away from home" discount if you decide not to bring your car on campus.

Do not buy collision and comprehensive coverage if your car is only worth a couple of thousand dollars. State minimum requirements should suffice. If your car is worth more than $4,000, you really should buy both collision and comprehensive. To pay less each month for these two coverages, increase your deductible but save enough in case you ever do have an accident or someone steals your car.

Renters Insurance

Gen Z makes up 22% of all renters, and many of you say that renting makes more sense right now than trying to buy in the inflated housing market.^[4] More than one-third of those surveyed in a 2022 Freddie Mac survey said homeownership is something they'd never  achieve. 

The average American renter spends more than 30% of their income on rent. As a renter, you should know that renters insurance is one of the most under-rated things you can buy to protect everything you own because replacing it all will be really expensive. Even if you’re scraping by and it doesn’t seem like you need another bill, consider what it’ll cost you to have to replace all your belongings if something goes wrong. A landlord’s policy will not pay for you to buy new clothes, jewelry and electronics after a fire or burglary.

If you have roommates, you can share a policy but look at the limits which may not cover everything. The more roommates you have, the higher the limit should be. Or you can each buy separate policies to ensure coverage. The only downside of that is that each of you will have to pay a deductible if all of your belongings are affected by damage or stolen from the property.

It’s important to consider which insurance products you need and which you can do without.

Home Insurance

According to Redfin, only 26.3% of Gen Z own a home. For these homeowners, homeowners insurance is like renters insurance and more. If you have a mortgage an insurance policy will be required by the lender, who owns the house until you pay it off and wants their asset protected.

Damages to a home’s structure (dwelling), roof or systems can be extremely expensive and may be covered by a home insurance policy, depending on what caused damages. Most storms are covered and so is fire (and more). Personal possessions that include clothes, appliances and everything you own is covered under personal property coverage in your home insurance policy. This means that you are protected in the event of a burglary and can get reimbursed for the stolen items.

The hardest part of buying a home insurance policy is trying to figure out how much of it you need. Avoid paying too much by making the mistake of covering the property for the market value of the home. All you need is to cover yourself for what it would take to rebuild the home (dwelling coverage). It’ll take a minute to do thorough research but it’s worthwhile, especially these days with inflated costs for materials and labor.

Your belongings will be covered for 50-70% of the dwelling coverage, so figure that in too. If your stuff is worth more, you may need to take out some riders on the expensive items, like valuable jewelry and fine art, if you have that sort of stuff.

If you rent out a room to help pay for the mortgage, make sure that renter buys renters insurance. If you own the property but are renting it out entirely, make sure to buy a landlord’s insurance policy and have the tenants buy renters insurance. This way, you’re covered, and they are covered.

Commercial Insurance

According to a recent study by ZenBusiness, a platform for business owners, 84% of the Gen Z surveyed said they wanted to start their own businesses and 50% of those with a job wanted to quit and start their own business.^[2] That makes Gen Z the most entrepreneurial generation yet.

Is business insurance required by law? Unless you are a sole proprietor with no employees, you’re legally required to have workers compensation to protect your employees. Also, if you use your car for your business and have an accident, you won’t be covered unless you have a commercial auto policy.

Other business insurance products are optional, but when you think about the types of losses you may suffer, it would be foolish to go without commercial coverage. For instance, if you have inventory and the warehouse burns down, you will be at a 100% loss unless you have business property coverage. If someone gets hurt in your shop, the medical bills may rack up and so will lawyer bills. With a general liability policy, you’ll be able to pay a deductible for substantial financial help to become whole again.

Life Insurance

Even though it may seem premature to think about burial costs and life insurance, life can take strange turns. Also, life insurance is not just about paying for funerals and paying out widows. In fact, 40% of Gen Z have a life insurance policy.^[3]

If you buy a permanent life insurance policy now, it’ll be very inexpensive because you’re young, unless you have health issues. Life insurance is more expensive as you age, so locking in a good rate now is not a bad idea, and a great way to start a tax-deferred savings account, which you can later use as a low-interest loan at 5 to 8% or even lower.

If like many other Gen Z you decide to start a business, the wealth you create in a permanent life insurance policy may help you begin that journey! You can also use the money for renovations to your home, which may increase its value.

You also have the option of buying a term life policy, which is only active for 10, 20 or 30 years but does not have a savings component. This is a less expensive choice and makes sense if you have a child or are planning to have one soon and can’t afford a permanent policy.