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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 auto insurance.

A birthday benefit

“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.

One of the characteristics that can factor into an auto insurance rate is your age. Drivers in the under-25 crowd usually see higher rates because they are considered higher risk.

Families who add a teen driver to their auto policy can expect an 82 percent premium increase, on average, according to a study commissioned by

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.

This millennial’s personal experience

A millennial that recently turned 25, for example, who was eager to take advantage of a lower car insurance premium did just that, but hit a snag. She emailed her insurance agent a few days after her birthday to see if she could get a rate reduction. Later that day, a representative from the insurance company called and left a voicemail informing her that she would be eligible to receive a lower rate — but not right away.

“We will be able to give you any additional savings that you might be entitled to (on your renewal date),” the rep said.

The problem was her renewal date wasn’t until June, and she didn’t want to have to wait that long. It was time for her to take action at that point, according to Passmore.

“If your current insurer won’t reduce your rate you probably should just shop around,” he advises. “You could always go back to your insurer and say, ‘Hey, I got a better rate from somebody else. Do you want to keep me?’”

Insurance companies are in business to make money. So you may find that once you indicate you may be going elsewhere, they might offer you a great rate you simply can’t pass up.

Age is nothing but a number

It turns out that turning 25 doesn’t always mean you’ll automatically save on auto insurance, and not just because you’ll probably need to be diligent and ask your insurance company to give you a break on your premium.

Though you’re transitioning to a different risk pool, you’re not guaranteed to save money on your premiums. For example, if you received your driver’s license at age 23, rather than 16, and only have 2 years of driving experience under your belt by the time you turn 25, you’re unlikely to notice decreases in your auto insurance until you gain more driving experience. You might also still pay more if you drive a super-fast sports car, which also is considered a higher-risk vehicle.

On the other hand, major life changes, such as getting married or buying a home, can work in your favor and decrease your rates, as both those events signal greater maturity.

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.

Loyalty comes with a price

Insurance companies are more likely to come up with a reason to raise your rates before they find a reason to reduce them, which is motivation enough to be proactive about securing the savings you deserve, Bach says.

“It’s a good idea to take matters into your own hands and use competition to your advantage,” she says.

You also should consider raising your deductibles to an amount with which you’re comfortable, Passmore adds. “You can save a lot of money year after year by just increasing your deductible by a couple hundred dollars,” he says. Keep in mind, though, a higher deductible means you will have higher out-of-pocket costs when you submit a claim.

Also, be aware that your insurer may be operating on the belief that you’ll never shop around. “If your insurer assumes you’re going to stay with them no matter what, then they’re not going to give you all the discounts that you may be entitled to,” Bach cautions.

Remember that there’s no penalty for switching auto insurance providers. So, you really have nothing to lose by shopping for the best deal.

How much can you 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 auto 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.

Other factors that may affect your premiums

While your age does play a significant role in your auto 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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