When Does Car Insurance Go Down?
Auto insurance rates are not set in stone. Most people know that your car insurance rates drop at age 25--usually by about 11%--but there are other milestones that may help a driver save even more money. In fact, your auto insurance rate will change at every stage of your life. Your insurance rate will go down when you graduate from college, get married, buy a house or retire. The best way to lower your rate is to maintain a spotless driving record and file no claims. Of course, there are other ways to lower your auto premium: garaging your car, driving fewer miles, improving your insurance score or credit score and bundling your insurance policies.
If you have received a moving violation or had an accident, your rates will go back to normal after three years, sometimes five. Read on for more information and tips on how to lower your auto insurance rate.
Life Events Affect Your Auto Insurance Rate
Major life events can have a positive impact on your auto insurance rate. Let's take a look at few of them now:
Pay Less as You Age
With age comes wisdom—and lower insurance rates. Young, inexperienced drivers pay the most for auto insurance, but they will pay less as they get older. So it's not just at the age of 25 that you see a dip in premium prices. Taking California as a typical example, the chart below indicates that auto insurance rates generally drop every 10 years:
|Age||Avg monthly rate|
|16 - 20||$240.18|
Graduate or Get a Great Job
All else being equal, a white-collar professional with a master's degree will pay less for auto insurance than a blue-collar worker with a high school diploma, according to a 2021 Consumer Reports investigation. So, if you finish a degree or get a great new job, your auto insurance rate may get lowered. Some customers may save some money at Allstate, NJM Insurance, Plymouth Rock, State Farm or Travelers, as they do not use education and occupation to determine insurance rates.
Most auto insurers wager that married people are more likely to exhibit safe driving habits than single people, thus your rate will drop if you get hitched. Taking Iowa as an example, the chart below indicates typical premium disparities based on marital status:
|Marital Status||Avg monthly rate|
While it seems as if a married couple were paying more than a driver who is single, the married couples' premium is covering two drivers, not just one, for just $2.59 more.
Insurance rates vary from state to state and from neighborhood to neighborhood. For example, city dwellers pay more than small-town folks for car insurance because urban areas have a higher rate of accidents, theft and vandalism. If you move house to a safer, less trafficked, less populated area, you will most likely see a drop in your insurance rate. If you move to a new state, your rate may go down because your new state requires its drivers to purchase less auto insurance than your previous state mandated. Also, your new state may just have cheaper rates than your old state's. Your address matters.
Your Child Leaves Home
Whenever a secondary driver is dropped from your insurance policy, you will most likely see a drop in your auto insurance premium—the fewer the drivers on a policy, the lesser the likelihood of an accident claim being filed. If your relatively inexperienced 22-year-old gets their own car and their own car insurance, you could see a big dip in your insurance rate.
People who are 65 years or older drive much less than they used to. For one thing, retired folks are no longer commuting to and from work. If you are driving much less now, your insurance rate should reflect that new reality. The following Federal Highway Administration figures show that a middle-aged person drives less and less as they get older:
|Age||Miles Driven: Male||Miles Driven: Female||Miles Driven: Total|
When Do Auto Rates Go Down, Male vs Female?
There is a movement to forbid auto insurance companies from basing auto insurance rates on gender but many states still do it. Each auto insurer has its own method of weighing gender as a risk factor. Based on their available data and how they interpret that data, some auto insurers charge women more and others charge men more—all things being equal—for their auto insurance premium.
While the chart below indicates discrepancies between what men and women end up paying for car insurance in their teens and 20s, both genders start to pay about the same amount when they reach their late 20s. Further, auto insurance premiums finally come down to the state average for both men and women drivers who are in their late 20s.
|State||Age||Male Per-Month Rate||Female Per-Month Rate||State Per-Month Avg.|
When Do Car Insurance Rates Go Down After an Accident?
While some insurers raise post-accident rates only when the policyholder is deemed responsible, other carriers raise rates regardless of who is at fault. So, a post-accident premium amount varies according to the severity of the accident, the policyholder and the auto insurer.
When determining an increase in rates after an accident, an insurer will look not only at the cost of the accident but also the policyholder's driving record, the number of claims the policyholder has made and other factors.
Post-accident rate increases typically last for three years, according to the Insurance Information Institute. In some cases, a post-accident surcharge may decrease as long as the policyholder stays accident-free. If a policyholder's DUI conviction accompanies their at-fault accident, the insurer may drop coverage or refuse to renew the policy.
How Auto Insurance Rates Are Determined
Auto insurance rates reflect the costs that carriers must cover as well as the scope of coverage and restrictions on your car insurance policy. So, it always pays to go over your policy to find out what it covers and doesn't cover and what you can expect from your insurer if and when you file a claim.
When insurance companies calculate an individual's auto insurance rate, they look at many factors to develop that individual's risk profile. If any of the following factors change for you, it's a good time to compare auto insurance rates:
Location of residence
Other licensed drivers in the household
Credit score (in most states)
Age, make and model of vehicle
So, your insurance rate will go down when your likelihood of experiencing a loss, based on these factors, decreases. For example, if you used to park your vehicle on the street but now park it in a garage, you may be eligible for a lower insurance rate because your vehicle is much less likely to be damaged by a falling tree or, say, vandalized or stolen at night.
Reasons Why Car Insurance Rates Increase
Auto insurance companies sometimes institute an across-the-board rate hike to cover rising costs due to the U.S. economy, inflation, fraud, natural disasters or an uptick in claims in your state. However, driver behavior is the primary reason why insurance rates go up or down. Here are some factors that will hike your current rate:
Making multiple auto insurance claims
Getting tickets for speeding and other moving violations
Causing one or more accidents
Getting convicted for driving under the influence of alcohol or drugs
Letting your auto insurance lapse
Adding vehicles or drivers to your policy
Losing your eligibility for a discount
Ways To Save on Auto Insurance
One great way to lower your auto insurance rate is to take advantage of an insurer's discounts. You can get discounts for taking a defensive driver course, getting good grades, remaining a safe driver, paying your premium in full, and being a veteran, teacher or firefighter. Most carriers cap the amount of discounts you can receive, but you still may be able to shave, say, 20% off your premium. Here are some other ways to lower your rate:
Get a new car with safety and anti-theft features
Reduce your daily commute or drive fewer miles
Become a homeowner
Bundle your auto coverage with other policies
Follow traffic laws and avoid getting tickets
Improve your credit score
Pay half or all your premium in advance
Sign up for paperless or autopay payment
Choose a higher deductible
File claims selectively
How Do I Find the Cheapest Car Insurance?
Your auto coverage premium may go down when you reach a major milestone in your life, buy a new car, move to a safer neighborhood in a cheaper insurance state or drop a driver from your policy. If you enroll in a driver's education course, snag a couple of discounts or stop commuting, your rates may go down as well. Further, your rate can decrease due to your DMV points expiring, your credit score rising and other factors.
The best way to find the cheapest auto insurance is to shop around for a new policy—after all, the insurance industry is very competitive, and they want your business. Using artificial intelligence and cutting-edge proprietary algorithms, SmartFinancial's team of licensed auto insurance agents can help you find the right policy with the right company at the lowest prices. Enter your zip code below or call 855-214-2291 for a free car insurance quote.
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