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If you’re a driver under 25, you’ve probably heard of the money magic that’s supposed to happen when you reach the quarter-century milestone, such as being able to rent a car at a standard rate — without young-driver surcharges. Another big plus of hitting the big 2-5? You could save on car insurance.

When does the cost of car insurance go down?

“Generally, once you turn 25, your rates are going to be a little better,” says Robert Passmore, assistant VP, personal lines policy for the American Property Casualty Insurance Association. And once you turn 30, insurance companies consider you an adult and your rates will improve again (assuming you have a clean driving record).

One of the characteristics that can factor into a car insurance rate is your age. Drivers in the under-25 crowd usually see higher rates because they are considered higher risk. Younger drivers have less experience and are more likely to engage in risky behaviors such as speeding, drinking and driving and texting while driving.

Families who add a teen driver to their car policy can expect an 82 percent premium increase, on average, according to a study commissioned by InsuranceQuotes.com. Once your teen gets a driver’s license, many insurance companies will require you to add them to your policy, even if they don’t have their own car. And while it’ll raise your car insurance rates to add your young driver to your policy, it’ll save them a ton rather than getting their own policy.

Should you kick your child off your policy as soon as they turn 25? It depends. If your child is still living with you, you can keep them on your insurance policy indefinitely. There is no certain age you have to remove them from your car insurance, unlike other types of insurance. Once they move out, they should get their own car insurance.

So once your 25th birthday rolls around, be sure to ask your insurer to take a new look at your premium, says Amy Bach, executive director of the insurance consumer group United Policyholders. “You always should ask. Don’t wait to be offered a discount or a rate reduction,” she says.

How much you can expect to save

Still, it’s important to understand that there’s no special discount you can redeem once you turn 25. However, your insurance rates do typically drop as you hit the quarter-century mark. The reason: you’re considered a more experienced driver that’s less likely to have an accident, according to Allstate. In most cases, premiums decrease by about 10 percent for drivers who have hit 25.

To ensure you secure the very best car insurance rate when you turn 25, you should maintain a good driving record. Avoid speeding, turn off all distractions, never get behind the wheel intoxicated, obey all road signs and traffic laws, and make every effort to drive defensively.

By doing so, you can appear as a “low risk” driver to insurance companies and save big on premiums.

Why you might not save on car insurance when you turn 25

If you have a less-than-ideal driving record as a teen, your rates won’t go down when you turn 25. They might even go up if you have a consistently poor driving record.

Also, if you got your license when you were older, for example if you learned to drive when you turned 23, your rates probably won’t decrease just because you turn 25, as you’re still a less experienced driver. Buying a new vehicle can also affect your rates, as insuring your brand new car will cost more than driving an older sedan.

The bottom line is that there are many factors that go into your insurance rate. Your rates might drop when you turn 25 but they don’t drop in every case. Talk to your insurance company and don’t be afraid to shop around and ask for discounts.

Still, keep in mind that all insurance companies don’t operate the same way. Since companies differ in how they approach the underwriting process, it’s often well worth your time to shop around.

Other factors that may affect your premiums

While your age does play a significant role in your car insurance premiums, there are other factors that may affect them as well. Some of these factors include:

  • Your driving history
  • Where you live
  • The vehicle you’re insuring
  • How frequently you drive
  • Your credit history
  • Your gender
  • Your marital status

Each of these factors may increase or decrease your premiums, regardless of whether or not you’re 25. For example, if you’d like to insure a brand new BMW X5, you can expect to pay more than if you were to insure a five-year-old Honda Civic.

Also, since data suggests that women are generally safer drivers than men, you may pay less if you’re a woman. In addition, if you commute an hour to work each day, you will likely end up with higher premiums than someone who works from home and doesn’t drive as frequently.

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