Best Car Insurance For 20 Year Old Male and Female in 2021

Irrespective of how old you are or how carefully you drive, it is mandatory to have car insurance. If you are 20 years old, it is all the more critical. This is the time many would be taking up odd jobs to support their education or even to drive to college or for work and leisure.

Why car insurance at 20 years old?

Many are yet to find a firm footing financially at this age, and not everyone can afford a new car or exorbitant hospital bills unless they are ultra-rich. By having a good insurance plan for your vehicle, you can breathe easy knowing that you have a ‘back-up’ plan or ‘shocker absorber’ to help you bounce back faster from losses caused by an accident.

Remember, you are no longer classified as a “teen” but a young adult. Having car insurance is not merely an option; it is a responsibility.

Why car insurance?

Unforeseen circumstances or accidents can happen out of the blue, and you should not leave anything to chance. Both grievous injuries and badly damaged cars can burn a hole in your pocket. In such a scenario, good car insurance will help you save money.

Average insurance cost for a 20-year-old in the U.S.

Before we look at the price range of different insurance companies, let us understand how the average annual premium for car insurance varies according to age. The chart below shows that the average yearly premium for a 20-year-old is 5,333 USD. 

The price in the chart below covers vital components of comprehensive and collision coverage, liability insurance, and uninsured motorist coverage.

The second factor you would notice is how the average annual premium is higher by almost 2000 USD for an 18-year-old ( just two years younger) who is just starting college. You would realize that the younger the driver, the costlier the premium. This means younger drivers are more prone to accidents due to rash driving. 

The third factor you would notice is how the premium gets cheaper for slighter older-age groups. You must not, however, delay purchasing car insurance to save money.

AgeAverage annual premium

Best car insurance for 20-year-old male and female

After studying samples of eight major insurance service providers in the U.S., it was found that Erie Insurance available in 12 states provides the cheapest insurance for a 20-year-old at 2,513 USD. 

In second place is the United Services Automobile Association (USAA), based in San Antonio and is a Fortune 500 diversified financial company with an annual average premium of 2,520 USD. Car insurance by USAA is, however, only available for military personnel and their family members. 

Among insurance companies available across the U.S., GEICO provides the cheapest car insurance with an annual premium of 3,304 USD.

GEICO, a wholly-owned subsidiary of Berkshire Hathaway, provides automobile insurance in all 50 U.S. states and Columbia. As of 2017, GEICO insured more than 24 million motor vehicles owned by more than 15 million policyholders.

InsurerAnnual premium
State Farm$4,733

Gender as a factor in car insurance for a 20-year-old individual

Women seem to have a slight edge over men only by their gender. A study of price margin for males and females between 19 to 21 years indicates that women pay 9 to 10 percent lesser annual premium than males. 

Another important aspect to note for women in their 20s contemplating car insurance is that the difference in percentage gets narrower as they get older. Availing insurance in your early 20s or even in your teens helps you save a considerable amount on your annual premium. 

If you take a close look at the table below, you would observe the difference between male and female drivers between 19 to 21 years old ranges from 200 to $ 600. The difference is more for 19-year-olds, while it is just a few hundred dollars for 21-year-olds.

AgeYearly premium for maleFor  femaleDifference percentage

Women are generally considered safer drivers than their male counterparts. It has also been observed that cars driven by women have lesser issues and last longer. This pricing variable is most likely due to the lesser risk factor with female drivers than male drivers.

Seven states where gender is not a pricing variable 

Though women in the age bracket of 19 to 21 seem to have an edge in annual premiums, there are seven states where gender as a price variable has been banned. The seven states are:

  • Montana
  • Hawaii
  • Massachusetts
  • California
  • Michigan (in certain areas)
  • Pennsylvania
  • North Carolina

Location as a significant factor in annual premium for 20-year-old

A study of the average annual premium for 20-year-olds in the ten biggest states has shown that they vary by a considerable margin from state to state. North Carolina is also the only state with an average premium below $ 3000.

A look at the table below will show how Michigan, with the highest premium ($15,573), is almost eight times the premium of North Carolina which has the lowest average premium ($1,996).

The second important observation is the price difference between the cheapest state North Carolina and the second most affordable state Pennsylvania is a big $ 1550. 

The third important observation from the list below is how the price varies by a more significant margin in the two states with the highest average premium- Florida and Michigan. The state with the highest average premium, Michigan (15,573), is more than twice that of Florida ($6,200).

StateAverage 20-year-old annual rates
North Carolina$1,996
New York$4,699

The United Services Automobile Association or USAA  does not feature in the list because it mainly for army personnel and their family members. If it were included in the list, it would be the cheapest car insurance for 20-year-olds in Pennsylvania, Michigan, New York, Illinois, and Texas.

Why you should shop around

The average premium can be tricky. Just because the average premium for North Carolina is $1,996 does not mean that all the insurance companies would provide a premium in the range of 1500 to 2500. When comparing the premium between insurance companies, it was observed that while a North Carolinian would have to pay $4,538 with Allstate, it was $733 with Geico.

Cheapest insurer in 10 sample States

Best Car Insurance For 20 Year Old

Talking about comparing insurers to find out which one provides the cheapest average yearly rate, here is a list of cheapest insurers from 10 sample states and the average annual rate.

StateInsurance companyAverage yearly rate
CaliforniaState Farm$2,708
TexasState Farm$3,261
GeorgiaGeorgia Farm Bureau$2,832
IllinoisState Farm$2,605
North CarolinaGeico$733
New YorkNYCM$3,595

Big margins between States 

This is perhaps the most intriguing part of getting an insurance cover for a 20-year-old. If you compare the average annual premium rates for the most expensive state Michigan ($15,573), and the cheapest insurer in the same state, Progressive, with $5,787, you would notice the difference is a whopping $ 9,786. You would observe big margins of savings even in other states when comparing the state average and cheapest rate by an insurer.

Different components of car insurance 

There is more to car insurance than it covering for damages caused to your car. It is advised to speak to an executive of an insurance company to know what it covers. 

These are three main components of car insurance: 

  1. Cover for damage to your vehicle: If you meet with an accident that may or may not involve a third party, the insurer will pay you an agreed amount to repair damages caused to your car. 
  2. Third-party cover: If there is a scenario where you are involved in an accident and the need to compensate the other party arises, this component is essential to save legal hassles.
  3. Personal injury or death cover: If you do not have a personal accident cover, some insurers provide it as a component/package of the car insurance.

It is also essential to buy a plan that suits your car. Just because the cover is higher, you should not opt for an expensive insurance plan least you end up paying an insurance amount that is higher than the value of the car. 

Other options to explore to get cheaper insurance

Take time to understand your insurance: It is best advised not to take a policy merely on hearsay or information readily available. When it comes to anything involving policy or plan with money, the thumb of the rule is first to do a detailed and careful analysis. 

This is done by a patient study of different insurance companies’ plans, talking to your peers who already have car insurance, or directly walking up to an insurance company and clarifying all your doubts. 

  1. Include yourself in your parent’s car insurance:  This is perhaps the best way to get cheap insurance. Some insurers give their customers the option to add family members to their insurance by increasing the premium depending on how many additional members are enrolled. The premium amount will definitely increase, but it will still be lower than a separate policy.
  2. Bargain:  Some insurers are ready to make a special concession for students. You may try convincing them to offer you a cheaper premium by showing them your exceptional grades, your good credit scores, or if you have taken a specific driving course which lessens the risk of accidents. 
  3. Chose a tailor-made insurance cover:  In a bid to cover all aspects, you might end up paying more than required. In case the risk factor is less, or you already have life insurance coverage for an accident, you may consider decreasing the cover to reduce your premium amount. Also, depending on the kind of car you own, you must choose the right type of collision coverage. If your vehicle is worth just a few thousand dollars, comprehensive coverage would only be a waste of money, and you might end up paying more for the insurance cover than the cost of the car. 
  4. Keep your budget in mind:  You should buy a policy with maximum coverage equal to the overall worth of your wealth. If you are looking for maximum range, you may opt for a more expensive insurance plan. But if you are only looking for a certain percentage of money for repair, you should consider one with a lower premium. 

The factors to generally consider are:

  • The insurers with the cheapest insurance in your state.
  • The average in your state.
  • The components your car insurance covers. 

Other essential factors to consider:

  1. The brand reputation: Always chose one that has a good reputation in the market. 
  2. Exclusions: Read the documents carefully before agreeing on car insurance to avoid any shock while claiming insurance. Please note that some insurers may not cover the loss incurred while driving under influence, breakdowns while on long trips, consequential loss, and wear and tear to the car’s parts or components.
  3. How much claims have been settled in relation to claims received:

This is mandatory before you buy an insurance plan. You must check the company’s record of number of settlements to claims received without fail. CSR is the number of insurance claims settled to the total number of claims received. This ratio should ideally be high, which indicates that customers have received the monetary cover for the loss.

Conclusion:  It can be tricky for a 20-year-old to decide on their car’s right insurance cover. A 20-year-old can, however, make smart choices like older adults provide they patiently study and understand the options and take enough time before deciding on car insurance.