However, this rate is based upon the insurance risk pool, or the average risk of all the insured vehicles. By restricting rentals to individuals aged 25 and over, rental companies reduce the risk of their entire pool, enabling them to have much cheaper fleet insurance rates.

The "25-year-old rule" is a persistent myth that stems from the risk-assessment models used by the insurance and car rental industries. While it is not a "law" in the United States, most major rental companies (like Hertz, Enterprise, and Avis) historically viewed drivers under 25 as a "high-risk" demographic statistically more likely to be involved in accidents. In 2026, you can actually rent a car as young as 18, 19, or 21 in almost every state, but you will be hit with a mandatory "Young Renter Surcharge" (often $25 to $50 per day). This fee is designed to offset the higher insurance premiums the rental company must pay for younger drivers. Two states—New York and Michigan—legally mandate that rental companies must rent to drivers aged 18 and older, though the fees there are often quite steep. For savvy younger travelers, the best "workaround" is to use organizations like USAA or AAA, or certain corporate accounts, which often have negotiated agreements to waive the young driver fee entirely, making it possible to rent without the "under-25" financial penalty.