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Insurance

The best car insurance companies for young adults

CNBC Select analyzed the top insurance companies for drivers under 25 based on cost, coverage and service.

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Thomas Barwick | Stone | Getty Images

Insuring a car can be expensive for anyone. But that's especially true when you're a young adult under the age of 25. That's because many car insurance companies consider your age and how long you've been driving when determining the amount you'll pay for coverage (also known as your premium). 

But, there's more than just your age that goes into the equation. For instance, are you being added to your parents' policy or will you get your own policy? Factors like your car's make and model, how many miles you drive, your gender identification, credit score and ZIP code may also help determine your premium. Every car insurance company has its own way of weighing this information to come up with your premium, which makes shopping around and comparing quotes important if you want to save money.

To help you start your search, CNBC Select broke down the top car insurance companies for young adults, depending on your needs. 

Best car insurance companies for young adults

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Best overall

State Farm Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    State farm is one of the largest auto insurers based on market share and has an excellent reputation for customer satisfaction. It offers 13 discounts, including ones for safe driving and young drivers.

  • Terms apply.

Pros

  • High customer satisfaction
  • Largest car insurance company in the U.S.
  • Accident forgiveness for good drivers

Cons

  • High NAIC complaint index score 
  • Doesn’t offer gap insurance

State Farm offers some of the most affordable full-coverage premiums for young adults, and boasts an excellent customer satisfaction score from J.D. Power, making it a top choice for most shoppers. In addition to student discounts, State Farm offers the Steer Clear program, which allows young drivers to save by taking a safety course.

Available in all 50 states, State Farm is one of the largest insurance companies in the U.S. based on market share, according to the National Association of Insurance Commissioners (NAIC). It is known for providing a rock-solid sense of security to its policyholders — AM Best, which measures insurance companies' financial strength and ability to pay claims, gave State Farm a superior rating of A++. State Farm also offers many other types of insurance coverage, including renters and homeowners insurance, which could help you combine policies and save. 

Average annual premium for a 20-year-old driver: $2,735

Best for discounts

Geico Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    Geico coverage and services are available in all 50 states and the District of Columbia and there are 16 different types of discounts available. In addition to the standard coverage options, Geico offers various optional add-ons, such as emergency roadside assistance, rental car reimbursement and mechanical breakdown insurance.

  • Terms apply.

Pros

  • Lowest average rates
  • Inclusive coverage options, including high-risk drivers
  • Available nationwide

Cons

  • High premiums for high-risk drivers 
  • Fewer branches for in-person services

Geico stands out for the number of discounts it hands out to young drivers. It offers 16 discounts, giving reduced premiums for a number of actions and behaviors, including good driving, taking a defensive driving course, insuring multiple vehicles and having good grades as a student. Even your fraternity, sorority or honor society membership could get you a discount with Geico.

Geico earned a superior A++ rating from AM Best, and sits just several points lower than State Farm in terms of JD Power's customer satisfaction ratings nationwide. 

Average annual premium for a 20-year-old driver: $2,686

Best for personalization

Nationwide Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    Nationwide offers near-nationwide availability and personalized services, such as On Your Side® Review, a free annual insurance evaluation to ensure you are adequately protected and are taking advantage of any discounts available to you.

Terms apply.

Pros

  • Available in 47 states and the District of Columbia
  • Lowest average premiums for full coverage

Cons

  • High average premium for minimum coverage

On average, Nationwide has higher premiums for young drivers than some of its competitors. However, it provides customers with lots of policy customization options. Optional add-ons include roadside assistance, accident forgiveness and a vanishing deductible. The company offers many types of discounts, including through SmartRide, which is a usage-based program that rewards safe driving. You can also save by bundling with other types of insurance products.

Coverage is available in 47 states and the District of Columbia (all states except Alaska, Louisiana and Massachusetts). Nationwide earned an A+ from AM Best and a high customer satisfaction rating from JD Power.

Average annual premium for a 20-year-old driver: $3,493

Best for customer satisfaction

Auto-Owners Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    Auto-Owners offers affordable premiums with high customer satisfaction ratings. There are 12 different types of discounts available, as well as various other types of insurance besides auto.

Terms apply.

Pros

  • tOffers at-fault accident forgiveness as an add-on
  • High customer satisfaction scores from JD Power
  • Low NAIC complaint index score

Cons

  • Only available in 26 states
  • Quotes must be obtained through an agent

Auto-Owners ranks highly for customer satisfaction and offers affordable premiums to young drivers shopping for car insurance. According to JD Power's ratings, Auto-Owners ranks several points higher than competitor Geico for customer satisfaction, and also received a superior A++ rating from AM Best. 

While you won't be able to get a quote without working with an agent, this company does offer more than just car insurance, allowing you to bundle policies together. The company also offers 12 discounts, including three discounts specifically for students. 

Average annual premium for a 20-year-old driver: $2,679

Best for military members and veterans

USAA Auto Insurance

  • Cost

    The best way to estimate your costs is to request a quote

  • App available

    Yes

  • Policy highlights

    USAA's auto insurance is available in all 50 states, Washington D.C. and some international locations. In addition to low rates and coverage options for unique circumstances, such as for active-duty members, customers have access to an intuitive mobile app.

Terms apply.

Pros

  • Lowest average premium for minimum coverage 
  • Highest customer satisfaction ranking
  • Superior discounts for military members

Cons

  • Only available to military members, veterans and their immediate family members

If you're one of the many Americans eligible for USAA, it could be a great place to start your car insurance shopping. The company provides some of the lowest rates available, while also claiming top ratings for financial strength and customer satisfaction.

USAA membership is available to those who are active or retired military, those discharged either honorably or 'general under honorable conditions,' and their family members and spouses. Membership can also be passed between generations.

Average annual premium for a 20-year-old driver: $2,426

FAQs

What is the most affordable car insurance company for young drivers?

There's no one car insurance company that's going to be the most affordable for every young driver. To find the best deal for you, you'll want to shop around. Get quotes from several insurance companies, and compare them. Keep in mind that the lowest premium isn't always the best. Instead, look for the coverage limits that are the highest, and then for the lowest premium. 

What are the different types of car insurance coverage?

There are several different types of car insurance coverage available, including:

  • Bodily injury liability: This insurance type covers costs associated with injury or death caused by you or another driver. It's one of the two types required in almost every state. 
  • Property damage liability: This coverage pays for damages to others' property if you're involved in an accident. It's also required in most states. 
  • Medical Payments or Personal Injury Protection: Also called PIP, this is required in some, but not all, states. It pays for medical expenses and lost wages for both you and your passengers.
  • Uninsured motorist coverage: This coverage can help if your car is damaged by an uninsured driver or if you're involved in a hit-and-run accident. 
  • Collision coverage: If you damage your car through a collision with another car or an object — like a guardrail, a pothole, or a deer — this coverage will kick in.
  • Comprehensive: Damages occurring through theft, fire, storms and flooding, and vandalism are only covered through comprehensive coverage. If you want protection for these things, you'll need to make sure the policy you're considering offers comprehensive coverage.
  • Glass coverage: If you get a crack in your windshield, this coverage can replace it. It's often not a required coverage. However, replacing the glass can range from $1,500 to $2,000 depending on the features in your car, according to Kelley Blue Book

While getting the lowest amount of coverage required in your state may be less costly upfront, the expenses could come later. State minimum coverage doesn't include many of the types of coverage that full coverage car insurance would carry, including comprehensive coverage. If you're involved in a situation where traditional liability coverage wouldn't apply — like a collision with a tree or damage from theft — it's worth considering whether you'd be able to afford to cover the expenses on your own.

What is a deductible? 

When shopping for car insurance, you'll see a number called a deductible. That's the amount you'll pay out of pocket if you file a claim with your car insurance company. 

Choosing a higher deductible generally lowers the amount you'll pay in premiums. Similarly, choosing a low deductible will generally raise premiums. 

One is not necessarily better than the other. The right deductible for your car insurance policy largely depends on your financial situation. You'll want to be sure that you could realistically cover the deductible if needed. 

Can you get a refund on car insurance?

Car insurance is generally paid on either a monthly or bi-annual basis. If you've already paid your premium for the policy period and want to cancel it, you'll generally get a partial refund for the unused portion.

Does credit score affect car insurance rates?

Your credit score is often a determining factor in the price you'll pay for car insurance. As a young adult, however, that can be difficult, since you haven't had the time to build up a long credit history and reach the higher scores of more experienced credit users. 

There are ways to build your credit for the future. Using a service like *Experian Boost™ can help raise your score by reporting recurring expenses like internet, phone bills, and streaming service payments to your credit report.  

Only four states — California, Hawaii, Massachusetts, and Michigan — restrict car insurance companies from taking credit scores into account when calculating premiums. 

How can I lower my car insurance?  

Raising your deductible could help to lower the premium you'll pay for car insurance. However, you'll be responsible for that amount should you need to file a claim so you shouldn't pick a deductible you can't comfortably afford to pay. Consider saving a chunk of money for that deductible in a high-yield savings account, where it can earn interest and be easily accessible if you need it.

Raising your credit score could be a way to save on your insurance coverage. Getting a secured credit card, paying bills on time every month, and even checking your score to see if there are any inaccuracies and disputing errors could help you lower the amount you'll pay for car insurance.

A more recent option to lower costs is to opt into telematic driving statistics through your insurance company. These programs monitor the amount you drive, when you drive and how safely you tend to drive in order to lower your premiums.

Lastly, bundling together your car insurance with any other types of insurance you may have could bring a discount. Consider getting your renters insurance or homeowners insurance policy from the same company as your car insurance policy. 

Is car insurance cheaper when you turn 25? 

Car insurance rates tend to decrease with age. Besides your driving record, car insurance pricing also considers factors like homeownership and marital status. And since many younger drivers may not have reached those milestones yet, it can be more expensive.

Note that in some states, including Massachusetts and Hawaii, car insurers can't use your age in the calculation at all.

Is it good to change car insurance every year?

It's a good idea to shop around for your car insurance coverage when you're nearing the end of a policy term.

You'll want to do exactly what you did when you first shopped for insurance, and start by getting several quotes. Compare the quotes to the offer given by your current company, and decide if you can get more coverage for the same or a lower premium by switching your policy.

Bottom line

Car insurance for young adults can be pricey, especially for those in their late teens and early 20s. However, doing some research and shopping around can help you find the best coverage for your money. When searching, consider the types of coverage available, the deductible amount, and the amount of coverage offered, in addition to the premium. Factors like the reliability and customer satisfaction ratings of the company can also help you decide. 

Our methodology

To determine the best car insurance companies for young adults, CNBC Select analyzed dozens of U.S. insurance companies that come with policies to suit an array of needs.

When narrowing down and ranking the best car insurance companies, we focused on average cost, coverage, availability, ease of use and customer satisfaction using data from the National Association of Insurance Commissioners, AM Best, J.D. Power rankings and car insurance premium data from Bankrate.com.

The average annual premium data is based on a 20-year-old driver with a clean driving record and good credit. The driver insures a 2020 Toyota Camry, commutes five days a week and drives 12,000 miles annually, with the following full coverage limits:

  • $100,000 bodily injury liability per person
  • $300,000 bodily injury liability per accident
  • $50,000 property damage liability per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 comprehensive deductible

After reviewing the above features, we sorted our recommendations by best overall, best for discounts, best for personalization, best for customer satisfaction and best for military members and veterans.

Note that the premiums and policy structures advertised for car insurance companies are subject to fluctuate in accordance with the company's policies.

Catch up on Select's in-depth coverage of personal financetech and toolswellness and more, and follow us on FacebookInstagram and Twitter to stay up to date.

*Results may vary. Some may not see improved scores or approval odds. Not all lenders use Experian credit files, and not all lenders use scores impacted by Experian Boost.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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