How Does Age Affect Your Auto Insurance

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How Does Age Affect Your Auto Insurance

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Many factors go into determining the amount of premium you pay for your car insurance. Unknown to most drivers and car owners, age is among the primary considerations that insurance companies use to determine how much premium they will charge for coverage.

Here we will discuss more how insurance companies calculate your auto insurance premiums based on your age.

How Does Age Affect Your Auto Insurance?

The age factor as a basis for insurance rates is empirically driven. Statistics indicate that younger drivers with less driving experience are more likely to cause or be involved in accidents. Older folks with more years behind the wheels are more experienced, careful, and knowledgeable on the road, therefore less prone to cause accidents. Here is a snapshot of age-premium correlation across various age categories.

Auto Insurance Rates for Teens

Teens incur the highest insurance premiums in the country. The rationale behind the premiums is simple; teens are new on the road, and their inexperience at navigating traffic induces mistakes hence causing accidents. As a result, teens are responsible for the highest number of accidents, more than any other age category.

According to the Center for Disease Control and Prevention, teens aged between 16-19 years old were involved in fatal crashes at a ratio of 1:3, relative to other age groups. CDC attributes the soaring accidents to teen's abuse of alcohol, an affinity for speeding and driving at night and weekends, the prime time when most accidents occur.

Insurance firms are coming up with discounts for teens with exemplary traffic records. Installing devices such as telematics to monitor driving patterns also help bring down the cost of auto insurance for teens. 

Learn more about Adding a Teenager to Your Auto Insurance Policy.

Auto Insurance Rates in the Twenties

As you leave your teens, you will likely see a slight drop in insurance premiums but still relatively higher than for the succeeding age groups. There are two primary explanations for the decline.

Insurance companies mull that you will have amassed considerable driving experience and well-acquainted with traffic signs as one enters their twenties. There is, therefore, a slight likelihood of making teen-like mistakes resulting in accidents. The statistics support this assertion, with the Insurance Information Institute noting less possibility for drivers in their twenties to have an accident.

The early twenties is also an age where you are likely to have achieved significant milestones; completing a college education, entering the job market, buying a home, and starting a family. The high sense of responsibility is likely to spill into driving habits, further reducing the probability of involvement in accidents.

In their twenties, drivers can enjoy further premium savings by bundling car insurance with homeowner insurance, which comes with discounts. You can also engage PolicyScout for the best policy for your car and the age-appropriate auto insurance in the market.

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Auto Insurance Rates for the Thirties

In the thirties, you are likely to be in a fully-fledged family and driving a better car to match your status. Ordinarily, insurance premiums will further go down from the twenties levels as the likelihood of accidents diminish. Moreover, with a family on board, you are likely to be a more careful driver, drive at moderate speed, observe traffic rules, and rarely being under the influence of alcohol.

That notwithstanding, trading your twenties jalopy for a pricey SUV will affect your premiums. However, you can find out from your insurance company or agent about discounts for loyalty and rewards for an exemplary driving record. Installing a telematics device can also be a vital bargaining chip at this age.

Auto Insurance Rates in the Forties

In your forties, expect some more pocket change as your car insurance rate goes down further. You are now clocking at least two decades of driving experience, and your steering ability is beyond reproach. You can make further savings by driving a modestly priced and reliable car in place of the high-end machine.

If your children are all grown up and driving, you may see an increase in your premiums. However, you may take advantage of discounts such as safe driving and good student discounts to keep the premium increment at a minimum.

Auto Insurance Rates in the Fifties

Your auto insurance premiums in the fifties will touch the lowest point, but only if you play smart. For instance, by bundling home with auto coverage, your premiums will go down considerably. At this stage, the children are all grown up and out of your policy, saving you even more dollars.

Some insurance companies are coming up with great discounts for fifty-year-olds. For instance, you may be eligible for mature driver discounts. 

Auto Insurance Rates for the Sixties and Above

Upon hitting sixty, your insurance premiums start to climb regardless of your driving record. Statistics indicate that as drivers get to sixty, there is a higher likelihood of having an accident and filing insurance claims. The Insurance Institute research report that the number of collision claims and liability for damage to other people's property starts to increase from 60.

At 65-75 years, the auto insurance premium shows a slight increase as compared to the early sixties. The rationale here is that driving at an advanced age is riskier due to health conditions such as poor eyesight and hypertension. The dwindling reflexes and diminished agility is also a risk factor that could possibly cause accidents.

Additional Factors that Determine Your Auto Insurance Rates

Besides age, other factors go into consideration to determine the premium you pay for your car insurance cover. These include the mode of car financing, mileage per annum, past traffic/road record, gender, location, credit score, and car model.

Source of Car Financing

Insurance companies will charge more for financed vehicles than for cars bought outright. Here is the rationale; 

Financed cars come with additional conditions, among them the requirement that the buyer obtains comprehensive insurance coverage, including collision and liability. A comprehensive insurance policy bought for financed vehicles will cost you more in terms of premiums.

On the other hand, with a car bought outright, you have the latitude of choice regarding the type of coverage you would want to take. A comprehensive cover will cost you roughly the same. However, you may opt-out and go for a third-party cover at a fraction of the cost. Foregoing collision and liability covers will bring down your annual premium.

Annual Mileage

Insurance rides on probabilities; the higher probability of an event occurring, the steeper the insurance cost. In auto insurance, the likelihood of involvement in an accident can result from various parameters, and the mileage you cover per annum also affects your insurance premium charges. 

High annual mileage indicates more time spent on the road and a higher likelihood of involvement in an accident. In this case, expect higher premiums than a local running car shuttling between office and home and covering shorter distances.

Driving Record

Your driving history is a rich trove of information that insurance companies will use to determine your premium. Traffic violations such as speeding and driving under the influence will lead to higher premiums. An accident-free record will also attract rewards in terms of lower premiums.

Is your insurance company rewarding your good driving habits with lower premiums year on year? If not, you are missing out on great discounts.

Gender

If you are a man, insurance companies will charge you a higher premium than women counterparts and not out of bias. Statistically, men are more likely to be involved in traffic accidents than women. Men are also likely to be flagged for serious violations such as reckless driving and DUI than women.

The gender factor in determining insurance rates has been outlawed in some states as it is patently discriminatory. Other insurance companies have voluntarily dropped the parameter as a matter of good business practice. Verify with your insurance company whether gender is still a factor in setting its rates.

Where You Live

Your location has a bearing on the number of premiums you pay for auto insurance. If you live in rural areas, your auto insurance premiums will be lower than for urban dwellers. There is less vehicular traffic and human traffic; therefore, the chances of involvement in an accident are minimal. 

For an urban dweller, the risk is higher due to heavy traffic. The urban crime levels also contribute to high premiums. Urban areas face the additional risk of auto theft and car vandalism. 

Credit Score

Your credit score will not just be useful in-car asset financing but also in determining your insurance premiums. Research shows that individuals with low credit scores file insurances claim more than individuals with a good credit score. They may not say it to your face, but most insurance companies will take a serious glance at your credit score before handing you that quote.

Car Make and Model

The make and model of your car will have a definite impact on your premiums. Sports Utility Vehicles are high-end cars that are expensive to maintain and replace. To cushion itself from avoidable losses, an insurance company will charge a higher premium.

How Can you Save Money on Insurance Premiums Regardless of Age?

The knowledge that insurance companies use your age to set payable premiums should not dissuade you from your saving goals. There are measures you can take to bring down on premium irrespective of your age. Here are a few tips;

Shop Around for Best Deals

Navigating the insurance marketplace is a nightmare for most people. However, shopping around remains a surefire path to getting the best deal on your car insurance. Obtain quotes from different companies and compare the policies. 

You may also consider checking with your insurance company before purchasing a new car to know how much it will cost in premiums.

Shopping around is easier said than done due to the hectic work-life cycle. In that case, consider consulting reputable insurance agents such as PolicyScout for quotes. With a wealth of experience and expertise in auto insurance, PolicyScout will help you get the best deal.

Take Advantage of Discounts

Insurance companies have various discounts for their customers of all age categories. Some companies have discounts for good grades and safe driving for teens and young adults in their twenties. 

This category can also benefit from discounts on telematic devices installed to monitor their driving habits. Joining your parents car insurance policy is also an option to avoid the exorbitant premiums paid by teens.

Drivers in their thirties and forties can get discounts by bundling their home/condo insurance with car insurance. You can also benefit from a stellar driving record, cars installed with security devices such as antitheft features. 

Some companies reward their loyal customers and give no claim bonuses to policyholders who have not filed claims for the entire year. Discounts such as paying an unchanged premium, safe driver discounts, good student, and pay-in-full are up for grabs if you meet the set conditions. Paying for minor repairs out of pocket is advisable as it keeps your driving record spotless.

The golden rule in getting most of these discounts is to ask your insurance company. You may also consider informing your insurance provider of significant life events such as marriage or buying a home and see whether they have something in store for you.

Saving Tips for Seniors

Senior citizens who see their insurance premiums take an upward trajectory can do the following to keep the rise at a minimum.

  • Changing the driving status from commuter to pleasure driving will lower the annual mileage hence lower premiums.

  • Enrolling in a defensive driving course makes one eligible for auto insurance discounts.

  • Purchase only the basic coverage due to minimal movements. You may also consider dropping collision and comprehensive coverage, which increases premiums considerably.

Final Word

The older you become, the less premium pay for your car insurance, at least until in the sixties where dwindling health will cost you a bit more. PolicyScout will help you shop for the best insurance for your car while keeping premiums at a minimum. Get in touch today for great deals that defy age.

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