Insurance companies love you for your wrinkles.
But it's not only about your age. It's about the house you've
bought, the spouse you have, and the bills you've paid.
That's why you're in the sweet spot for the best auto insurance
rates from most companies if you're between the ages of 40 and 60,
says Penny Gusner, consumer analyst for CarInsurance.com.
"These drivers have usually settled down, have a family and
drive responsibly, and are responsible with their finances," Gusner
says. (See "
How your insurance rates change
.")
A two-year analysis of nearly 200,000 quotes delivered through
CarInsurance.com's online comparison engine showed that
16-year-olds saw an average rate of $4,075. By age 21, that average
fell by half. And by age 50, it fell by half again.
Older drivers are more likely to be contending with slower
reaction times behind the wheel and worsening eyesight. Those risks
overcome greatly reduced mileage to result in rates that begin
rising again after age 65.
Average car insurance quotes by age
| Age |
Average quote |
Age |
Average quote |
Age |
Average quote |
|
16
|
$4,075
|
24
|
$1,749
|
60-64
|
$1,159
|
|
17
|
$3,564
|
25-19
|
$1,573
|
65-69
|
$1,138
|
|
18
|
$3,165
|
30-34
|
$1,519
|
70-74
|
$1,161
|
|
19
|
$2,502
|
35-39
|
$1,484
|
75-79
|
$1,218
|
|
20
|
$2,381
|
40-44
|
$1,384
|
80-84
|
$1,381
|
|
21
|
$2,124
|
45-49
|
$1,324
|
85-89
|
$1,370
|
|
22
|
$1,964
|
50-54
|
$1,252
|
90-94
|
$1,640
|
|
23
|
$1,823
|
55-59
|
$1,182
|
95-plus
|
$1,955
|
The penalties of youth
Whether someone has settled down in life or can balance a
checkbook may seem irrelevant when it comes to purchasing auto
insurance. In fact, they're just two of a multitude of
factors that come into play
when insurance companies set their rates.
Some factors are obvious. If your driving history is marred by a
string of accidents and driving infractions, you can expect your
rates to soar.
And age is a key consideration. "Younger drivers tend to take
more risks," says Chris Hackett, director of personal lines policy
for the Property Casualty Insurers Association of America. That can
lead to younger drivers being involved in more accidents and
receiving more traffic tickets.
But even with clean records, drivers who have been licensed less
than three years tend to pay an "inexperienced operator surcharge,"
he says.
Though much depends on the insurance company, the penalty for
inexperience usually disappears altogether by the time a driver has
reached 25. But the drop doesn't come all at once.
For example, a major insurance company in California multiplies
its base rate for liability coverage by 1.9 for newly licensed
drivers -- effectively doubling the premium. That factor drops to
1.2 with five years' experience. At 10 years, the factor is .85 --
now, in effect, a discount off the basic rate.
Revenge of the minivan
"A younger driver is more apt to be distracted when they're
driving. A 40-year-old is likely to be more cautious," says Lynne
McChristian, a spokeswoman for the Insurance Information
Institute.
That's borne out by auto accident statistics.
National Safety Council
data show there were 211 million licensed drivers in the United
States in 2009. Those who were age 19 and younger accounted for
less than 5 percent of the licensed drivers but were involved in 8
percent of fatal crashes and 12 percent of all accidents. Drivers
between the ages of 20 and 24 made up more than 8 percent of the
licensed drivers, but were involved in 13 percent of fatal
accidents and 15 percent of all accidents.
But there's much more to it than that.
Along with considering your age and experience when setting car
insurance rates, your insurer looks at a host of other factors. If
you have no black marks on your driving or claims histories, the
biggest factor influencing your rates is usually your ZIP code.
More auto accidents are likely to occur in urban areas than
rural ones, and even in the same city, auto thefts and auto
break-ins may be more common in certain ZIP codes. All other things
equal, the same driver in the same car may see rates differ by
hundreds of dollars from one side of town to the other, and by
thousands from state to state.
Unfortunately, younger drivers
tend to prefer downtown
to the suburbs. (See CarInsurance.com's "Nosy Neighbor" tool to
compare rates by ZIP code in your town.)
Auto insurers in many states also look at your credit score.
Those who exercise common sense with money are expected to exercise
common sense behind the wheel, Hackett says.
Young drivers tend to have no credit or bad credit. (See "The
double whammy of bad credit.")
The type of vehicle you drive also plays a major role, Hackett
says. If you own a BMW rather than a Camry, you are likely to face
far higher rates.
And insurance rates for the same individual can vary greatly by
company because each insurer uses its own statistical information
on the various age groups it insures, Hackett says. The difference
can be hundreds, even thousands of dollars. (See "Pocket $1,102
just by shopping around.")