Insurance for Young Adults: Tips, Advice, Mistakes to Avoid

By Kevin Quinn and the Mercury Team

Stepping into adulthood is a big deal, and there’s so much to figure out: budgeting, finding the right place to live, maybe even buying your first car. Then, there’s insurance. It may feel like just another bill or a confusing box to check, but treating insurance as an afterthought is risky. One fender bender, apartment fire, or stolen laptop could set you back in ways that are tough to bounce back from.

In this guide, you’ll find top insurance mistakes young adults make, how to avoid them, and practical advice for insurance decisions.

Mistake #1: Choosing the Cheapest Policy Without Understanding Coverage

When you’re on a tight budget, it’s tempting to focus solely on the price. You might see a state-minimum policy that saves you money each month and think, “That’s good enough.”

While saving money is important, the cheapest policy can leave you exposed. For example, if you carry only liability coverage and get into an accident that’s your fault, your insurance won’t pay to fix your own car.

How to Avoid It

Start by assessing your specific needs and risk profile, rather than just focusing on the price tag. If you rely on your car to get to work every day, can you afford to replace it out of pocket? If not, you likely need more than the minimum.

That’s why you should learn about the different types of car insurance coverage (e.g., liability, collision coverage, comprehensive coverage, etc.) so you’ll know how to choose car insurance that actually protects you, and know what’s covered before you need to file a claim.

Mistake #2: Not Comparing Rates or Speaking With an Insurance Expert

Trying to figure out insurance on your own can get confusing fast. It’s easy to miss an important coverage option just because you didn’t know to look for it. A local agent can help you sort through your choices, match coverage to your lifestyle, and make sure you’re not paying for extras you don’t need, while still protecting what matters.

“Young adults sometimes think they have to figure everything out on their own, but insurance is complex. A 10-minute conversation with an expert can save you thousands of dollars and hours of stress down the road,” says Kevin Quinn, VP, Auto Claims.

How to Avoid it

Get at least a couple of quotes for the type and amount of coverage you need, not just from different companies, but for different coverages. Also, ask questions about deductibles, discounts, and what’s really included. It’s the only way to know you’re truly comparing apples to apples.

Mistake #3: Forgetting About Discounts

You may see a price online and assume that’s it. But most insurance companies offer several ways to save, especially if you’re a safe driver or good student.

How to Avoid It

Check for safe-driver and good-student discounts, and don’t forget that you can bundle renters and auto insurance for better rates. Just ask about available types of auto discounts or browse your provider’s website so you’re saving everywhere you can.

Mistake #4: Skimping on Liability Coverage

Minimum state coverage sounds good until you realize it’s not enough if something major happens. If you cause an expensive crash, you could wind up responsible for huge bills your insurance won’t cover, which means your own savings could take a hit.

How to Avoid It

Don’t just stick with the state minimums. Bumping up your liability coverage can cost just a few bucks more per month and could save you a lot in the long run. Check what your state requires, then talk to your agent about what’s realistic for your situation.

Mistake #5: Not Updating Your Insurance When Life Changes

Life moves fast in your twenties: new jobs, new apartments, maybe even a new car or roommate. If your insurance company doesn’t know about those changes, your policy might not cover you when you need it.

Common updates include:

Moving to a new address
Buying a new car
Living with someone new (roommate or partner)
Changing your daily commute (like remote work)

How to Avoid It

Whenever something big changes, just give your insurer a heads-up. It keeps your policy up-to-date and your rates accurate, so there are no unpleasant surprises if you need to make a claim.

Mistake #6: Not Updating Your Insurance When Life Changes

Buying a home is exciting (and expensive). One of the top mistakes to avoid when buying homeowners insurance is assuming everything is covered automatically. Coverage can vary by policy, and some events may require separate coverage or endorsements, such as floods and earthquakes.

How to Avoid It

Take a little time to read over what’s covered and what isn’t, especially the exclusions list. Knowing the difference between dwelling, personal property, and liability coverage makes it a lot easier to feel confident about your protection. To learn more, read our post about homeowners insurance and what it covers.

Mistake #7: Overlooking Renters Insurance

You may think your landlord’s insurance covers your belongings. However, it only covers the building, not your items. If your laptop, bike, or clothes get ruined, that comes out of your pocket.

How to Avoid It

Don’t skip out on renters insurance. It can help cover:

Personal belongings (like furniture, clothes, and electronics)
Liability protection
Extra living costs if you can’t stay in your home after a covered event

Plus, renters insurance is affordable (generally between $13-$23 per month), making it an easy win for peace of mind.

Mistake #8: Ignoring Simple Maintenance That Helps With Claims

Insurance covers sudden, unexpected issues, not things you could have prevented, such as letting your oil run dry or ignoring a leaking roof. Claims are often denied for things that break down due to neglect.

How to Avoid It

Keep up with small, routine maintenance, like tire checks, oil changes, checking your smoke detectors, and inspecting your pipes and roof. These small steps help prevent big headaches (and denied claims) down the road.

Mistake #9: Signing Without Asking Questions

Insurance terms can feel confusing. A lot of people sign without fully understanding what they’re agreeing to, which can lead to issues later down the road.

How to Avoid It

Don’t be afraid to ask questions. Be sure to ask:

What’s my deductible?
What are my limits?
What’s excluded?
What discounts can I get?
What would I pay after a claim?

If something doesn’t make sense, ask again. You should feel confident in what you’re paying for.

How Young Adults Can Choose the Right Insurance Policy

Tackling insurance can be a lot less stressful than you think. Here’s a quick checklist that can help:

Shop around for a few quotes to make sure you’re not overpaying.
Double-check your coverage limits so your stuff and your savings are protected.
Check out bundling options for discounts.
Always look for extra discounts (good driving, good grades, safety features, etc.)
Plan to review every year to make sure your coverage is still a good fit.
Update as soon as your life changes (moving, new job, new housemate, etc.)

Final Thoughts: Smart Insurance Decisions Start Early

You don’t have to become an insurance expert overnight. But avoiding these common mistakes (and using a few smart insurance tips) can help you protect what you’ve built and stay ready for what’s next.

Not sure where to start? Mercury can help you compare options and choose coverage that makes sense for you.

Kevin Quinn

VP, Claims at Mercury Insurance

Kevin Quinn is Vice President of Claims for Mercury Insurance, where he leads auto claims adjusting nationally. Quinn has been with Mercury since 2015 and has been in the industry – starting as a claims adjuster – for more than 20 years. Quinn received his undergraduate degree in Business Administration from New York Institute of Technology and also holds a Juris Doctor degree from California Western School of Law.