It's no secret that young drivers are expensive to insure. Countless studies have indicated that inexperienced young drivers are involved in accidents at far higher rates than their more mature peers. In fact, they're significantly more likely to be involved in accidents than older drivers with similar levels of driving experience. In other words, there's something fundamentally different about the psychology of the average young driver. They're more likely to take risks and make questionable decisions with their vehicles. As such, they cause more financial headaches for their insurance providers and must pay higher premiums as a result.
While inexperienced drivers generally pay more for car insurance coverage than more responsible drivers, it's difficult to make broad generalizations about the exact cost of insurance for a given 21-year-old driver. Auto insurance companies use dozens of criteria to determine the appropriate rate for each policyholder. In promotional materials, these are often framed as "discounts" and "savings opportunities." In reality, these criteria offer clues about a given driver's likelihood of being involved in an accident or otherwise sustaining damage to his or her vehicle.
Some of these criteria specifically target young drivers. For instance, many insurance companies offer sizable discounts to students who receive solid grades. The threshold for this "good student" discount typically falls in the 'B' range. A driver who qualifies for this discount may see his or her premium payments reduced by 5 to 15 percent. Young drivers who choose to marry may also qualify for substantial insurance discounts.
A young driver's final insurance costs many also turn on certain vehicle-specific characteristics. In general, insurance premiums for a given vehicle increase proportionally to its resale value. A vehicle worth $15,000 will almost always cost more to insure than a vehicle worth $5,000. Likewise, financed vehicles tend to cost more to insure than "owned-outright" vehicles. This is because most reputable lenders require the vehicles that they finance to have comprehensive insurance coverage that covers all types of damages.
Finally, the cost of auto insurance is highly location-specific. This is due both to state-level laws governing auto insurance as well as local factors that increase the perceived risk of vehicle use in certain areas. For instance, drivers tend to pay more for auto insurance in Florida than in many other states. This is due both to the state's relatively high accident and vehicle theft rates as well as its vulnerability to damaging storms and floods.