Why is insurance more expensive for 21-year-olds?

Car insurance for 21-year-old drivers can be more expensive because young drivers are more likely to engage in risky driving behaviors like speeding. Insurance companies see unsafe drivers as more likely to file claims and charge them higher rates to compensate for this risk. Even with a spotless driving record, 21-year-old drivers will likely see high car insurance rates, but premiums tend to come down in your mid-20s as long as you continue to practice safe driving habits and monitor your other rating factors, such as your vehicle type and credit rating (in most states).

Is it cheaper to stay on my parents’ insurance policy?

Whether or not it is cheaper to stay on your parents’ car insurance policy depends on your situation. If you are still living at home, do not have your own vehicle and only occasionally drive your parents’ car, you may be able to stay on their policy as a permissive driver. However, if you have moved to your own residence or own a car that is registered in your name, you may be required to purchase a separate policy from your parents.

Will my premium go down as I get older?

In general, car insurance premiums tend to decrease around age 25 as you gain more experience behind the wheel, assuming you maintain a clean driving record. However, age is only one of the rating factors for car insurance. Other factors, like the cost of labor and repairs, crash rates in your area, your driving record, where you move to, what kind of car you purchase and your commute, can affect your rate. As such, it is normal for car insurance premiums to fluctuate from year to year.

At what age are car insurance rates most expensive?

Car insurance rates are usually highest for teenagers on their own car insurance policies. While you usually have to be insured on an adult's policy until you turn 18, 18-year-olds on their own car insurance policies see the highest average rates of any age group. These drivers pay an average full coverage rate of $7,499 per year. This is 86 percent higher than 18-year-olds who choose to stay on their parents' policies and 80 percent higher than 21-year-old drivers on their own policy.

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Car insurance for 21-year-olds

Written by

Ashlyn Brooks

Edited by

Amelia Buckley

Edited by

Amelia Buckley

Updated Feb 06, 2025

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How much is car insurance for a 21-year-old?

According to Bankrate’s review of quoted annual premiums, 21-year-old drivers pay an average of $4,333 per year for their own full coverage car insurance policy, which is 70 percent higher than the national average rate of $2,542 per year. The average minimum coverage policy for a 21-year-old costs $1,250 per year, which is more than $500 higher than the national average of $740 per year.

Drivers who live in the same residence as their parents can be listed as a driver on their parents’ insurance, which can make the overall cost of coverage less expensive. The average annual cost of car insurance for a 21-year-old on their parents’ policy is $3,506 for full coverage and $1,044 for minimum coverage. However, keep in mind that being added to your parents’ policy still causes a significant increase in premium and your driving record will also impact their rates.

The reason why car insurance rates are higher for young adults is because prices are based on risk. If you are 21 years old, you have less driving experience than an older, more experienced driver. To compensate for the increased risk of causing an accident, car insurance companies typically charge a higher rate if you are recently licensed. Generally, your premiums should begin to decrease when you turn 25.

Car insurance rates for 21-year-olds by state

Another factor that can significantly affect car insurance premiums is where you live. For example, in states with a high risk of severe weather or a large number of uninsured drivers, the average cost of car insurance is likely to be more expensive. Rate data shows that Florida has the highest full coverage car insurance rates for 21-year-olds on their own policies ($6,417) and Hawaii has the cheapest rates ($1,768). However, if you live in Hawaii or Massachusetts, car insurance companies are not allowed to use age as a rating factor for premiums, which helps explain why average rates are so low in the Aloha State.

The table below highlights the average cost of full coverage car insurance for 21-year-olds in every state. You can also see the state-by-state breakdown of rates for 21-year-olds on their parents’ policy vs. their own policy.

Hawaii