Will my rates decrease when I turn 25?
Parents, Young adults, and teenagers for years have been waiting until that magic birthday and no I am not talking about your 16th, 18th, or 21st birthday.
I am talking about that 25th birthday, the year in which your parents and grandparents have always told you that is the year when your auto insurance rates will decrease.
Ever since I started in the insurance industry 15 years ago, giving out bad news is my least favorite thing about it.
And if you were hoping this blog was telling you that your rates will drop drastically when you turn 25, then I want to apologize in advance.
Decades ago, auto insurance rates would drop significantly at your immediate renewal following your 25th birthday.
It didn’t matter if you were still a driver on your parent’s insurance policy or if you had your own insurance policy, consumers would see up to a 50% savings on their rates.
Even though it has been many years since the auto insurance industry used this age as a major rating factor, we still get this question asked a few times a year.
What changed
Insurance Rating has changed significantly. No longer are they using books and basic statistics like age, location, and the type of car you drive.
Auto insurance is determined using hundreds of different tiers and your rates are determined specifically for you.
Actuaries use data to determine what characteristics belong with the drivers who are at a higher risk to be in an accident.
Besides using many more characteristics to determine rates, this is also the time when insurance carriers started using credit as a factor.
Credit Rating
Auto insurance and most home insurance policies are determined using an insurance score based on credit and rates can fluctuate differently between someone that has a higher credit score verse someone who doesn’t.
Those same actuaries determined that people with lower credit, cost the insurance company more money, whether due to higher claims percentages or the amount of work sending late payment notices, or cancellations and rewrites.
Even though the drop-in rates at your 25th birthday are not the same as it once was when you were 25 or when your parents were (depending on who is reading this). The good news is that with the number of factors they have now, you also are not paying the higher premiums between the ages of 16-24.
How do get the best rates
The best way to make sure you have the best auto insurance rates is to use an independent insurance agent who can shop multiple insurance carriers and give you the options you deserve.
If you do not know an Independent Insurance agent feel free to contact us at Crowley Insurance and we will be glad to put together some options for you and your family.
Hit the button below to get that process started.
