Cheapest Car Insurance for Drivers Under 21 (2023)

If you’re under 21 and still relatively new to driving, finding cheap car insurance can feel like searching for a light switch in the dark. The higher rates can be overwhelming, leaving you frustrated and uncertain about the best coverage options.

Whether you’re looking for cost and coverage options on your own or you’re a parent on a mission to help your young driver find coverage that won’t cost a fortune, this guide is here to light the way. 

Why car insurance is important for new drivers

Most states require you to get car insurance before you take your vehicle on the road. But car insurance has far more value than that — it’s a critical safety net, especially for young drivers. Reliable coverage can protect you financially if you’re in an accident.

Consider this: Without insurance, the cost of damages from even a minor fender bender can quickly add up, draining your savings or plunging you into debt. You could be responsible for paying for anything from car repairs and replacement to medical bills resulting from injuries. It can be particularly challenging for young drivers on tight budgets to cover these costs.

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How much does car insurance cost for drivers under 21?

Numerous factors influence your car insurance premiums. Location, age, and gender play a major role in the cost of car insurance for young drivers. Your car type, driving experience, and credit score also affect how much you pay.

By age

To give you a clearer picture, let’s break down the average cost of car insurance for liability-only and full-coverage insurance by age. Drivers 18 years of age pay 33% more for car insurance than 20-year-old drivers, according to Insurify data.

By gender

When it comes to gender, males are more than twice as likely to get in a crash compared to females. In 2020, the National Highway Traffic Safety Administration (NHTSA) reported that 28,033 males were in fatal crashes compared to 10,690 females.^[1] Statistics like these help explain why insurers charge males higher insurance premiums — 13% higher than female drivers, Insurify data shows.

By state

Variations in insurance laws, population density, and car accident rates determine how much risk an insurer has when offering a car insurance policy. The differences can cause prices to fluctuate significantly from one state to another.

For example, North Carolina has the cheapest rates, at $124 per month, while young drivers in New York pay an average monthly rate of $867.

What to look for in a car insurance policy for drivers under 21

Uncovering your state’s minimum car insurance requirements and comparing policy costs is just the beginning. While insurers let you pick and choose policy add-ons to customize coverage, you should understand how each type of coverage works before purchasing a policy.^[2]

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  Liability

  Liability coverage is a fundamental part of any car insurance policy. If you’re responsible for an accident, this coverage pays for the other party’s medical bills and property damage. It helps shield you from potentially devastating legal and financial consequences.

• 

  Collision

  Collision coverage can give you peace of mind if you’re in an accident with another car or object, like a fence, tree, or pothole.^[3] It helps ensure you can get back on the road without the burden of repair expenses weighing you down, even if you’re at fault for the accident.

• 

  Comprehensive

  A shield against non-collision damages, comprehensive insurance protects your vehicle from theft, vandalism, falling objects, fire, and natural disasters. It provides peace of mind, especially if you park in higher-risk locations or during severe weather.

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  Medical payments

  Medical payments coverage pays for necessary medical treatments and hospital bills that result from an accident. It can cover you, your passengers, or family members driving the insured vehicle, adding an extra layer of financial protection.

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  Personal injury protection

  Also known as no-fault coverage, personal injury protection (PIP) covers medical expenses, lost wages, and other related costs regardless of who caused the accident.

• 

  Uninsured/underinsured motorist

  If you’re in an accident with a driver who doesn’t have enough insurance or doesn’t have insurance at all, uninsured/underinsured motorist coverage can cover expenses when the other party can’t.

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  Towing and labor

  The last thing you want to worry about if you’re stuck on the side of the road is the cost of getting help. Policies that include towing and labor can come to the rescue. Towing and labor covers towing your vehicle and can provide additional roadside services, like fuel delivery and help for a flat tire or dead battery. It can be a lifesaver when you need it most.

• 

  Rental reimbursement

  If your vehicle is in the shop for covered repairs, rental reimbursement helps pay for a rental car.^[4] While your vehicle is out of commission, it minimizes disruptions to your daily routine, helping you get to work or school and take care of other responsibilities.

Cheapest car insurance for drivers under 21

The company you buy your car insurance policy from makes a huge difference in how much you pay. Insurance rates vary between companies, so shopping around is essential to finding cheap car insurance for new drivers under 21. You should get quotes from at least three companies to compare rates and uncover potential savings opportunities.

This is where a comparison-shopping website can really shine. Using a comparison tool, you enter your information once and walk away with quotes from various car insurance companies. Taking the time to explore insurers and get quotes can seem tedious, but it’s hands down the quickest and easiest way to find the best rates on car insurance.

Here are the top five cheapest insurers and their average monthly car insurance rates, to give you an idea of how prices can change between companies:

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Staying on your parents’ policy vs. getting your own policy

If you’re driving your parents’ vehicle, staying on your parents’ car insurance policy is a no-brainer. If you have your own car, the decision might not be so cut and dry. Each option has advantages and disadvantages, and the best choice depends on your situation.

When to stay on your parents’ policy

Sticking with your parents’ policy is the obvious choice if you drive their car. It usually means lower rates than if you had individual coverage, thanks to insurers offering multi-car and multi-driver discounts. You also benefit from establishing a coverage history. Keeping your car insurance with the same company and not letting it lapse can lead to discounted rates later on.

The downside is that your driving history affects the premiums for the entire policy. For example, your parents’ insurance rates may increase if you’re in an accident or get a speeding ticket. Plus, even though there’s no age limit for being on your parents’ policies, some companies may require you to have a policy in your name under certain circumstances, such as if you move out.

When to get your own car insurance policy

Generally, you can stay on mom or dad’s car insurance as long as you continue to live at home, even if you go away to college. At some point, you’ll need to purchase an individual policy. It gives you full control over how much coverage you have and limits the financial impact of any claims to your policy alone.

However, you’ll pay some of the highest rates, especially if you’re under 21. Insurers tend to see younger drivers as having less experience and being more prone to accidents, which can drive up costs.

A few situations can make getting your own policy necessary or highly beneficial, such as:

• Moving out: Insurers typically limit a shared insurance policy to drivers in the same household. When you move out, unless you’re going off to college, you’ll need a policy in your name.

• Marriage: Getting married or starting a family can mean getting your own coverage or combining policies with your spouse.

• Buying a car: When you buy a car, especially if you take out a loan for it, you may need an individual policy. It depends on the insurer. Some car insurance companies will let you keep your parents’ policy if you live at home and park your car there.

• Financial independence: An independent policy may be worth considering if you can afford to handle your insurance expenses.

• Driving record: Insurance companies can remove you from the family plan if you have several accidents or driving infractions.

• Different coverage needs: Getting an individual policy might be necessary if you have different coverage needs. For example, you might own a valuable or modified vehicle or have a long commute that requires specific coverage that your parents’ policy doesn’t offer.

How to save money on your car insurance premium

Choosing an affordable insurance company can help you lower premiums, but it isn’t the only way to curb your insurance costs.^[5] A good understanding of how insurers calculate premiums and how to leverage specific strategies is also helpful. However, keep in mind that cheaper isn’t always better. For the best roadside protection, you must balance cost and quality.

Research other discounts, including bundling

Some of the cheapest car insurance companies offer various discounts to help lower prices. Bundling is a common savings strategy that reduces premiums when you combine policies, such as auto and home insurance, with the same company. You may also get discounts for being a good driver, paying for a full year in advance, or setting up automatic payments.

Comparison shop

Prices can vary drastically between insurance companies. Shopping around and comparing quotes from different companies can help you spot a better deal.

Just make sure you compare apples to apples — companies can offer different coverage options and deductibles. Be sure to read the fine print when comparing policies to ensure they have the same coverage and terms.

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Increase your deductible

A higher deductible can lower your insurance premium. Higher deductibles mean you’re taking on more risk, and your insurance company won’t have to pay as much if you file a claim.^[6]

However, it’s important to make sure you can afford the higher out-of-pocket expense if you need to make a claim.

Maintain a safe driving record

Every ticket, traffic violation, or accident is a red flag for insurers, and these violations can lead to higher auto insurance rates. Maintaining a clean driving record gives you a lower risk profile.

This way, you can qualify for lower rates now while establishing a safe driving history that leads to more significant savings over time.

Choose an appropriate car 

Insurers consider the make, model, and year of your car when giving car insurance quotes. High-end luxury cars and sports cars often come with a heftier insurance cost. On the other hand, safe and reliable vehicles with a moderate price tag can lower the price you pay for coverage.

Pay your bills on time

Some insurance companies believe there’s a link between financial stability and the number of claims a person files. Car insurers can use your credit score to set rates unless you live in California, Hawaii, or Massachusetts.^[7]

Because your payment history makes up 35% of your FICO Score, you may be able to get lower premiums if you pay your bills on time.

Maintain good grades

If you’re a high school or college student, doing well in school can translate into cheaper car insurance. Insurers can offer a good student discount that can lower prices for drivers with a high GPA, typically around a B average or better. Ask your insurance company if it offers any discounts for students to take advantage of savings.

Car insurance for drivers under 21 FAQs