How Much Age Affects the Cost of Auto Insurance, and What You Can Do About It

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It’s no secret that young drivers pay more for car insurance; just ask parents who have added a teen to the family auto policy, only to reel at how high the tab is. Less acknowledged, yet increasingly evident with an aging population, is that premiums also edge up for drivers who continue to take the wheel into their 70s and beyond.

Here’s how big an impact youth and old age can have on the cost of your car insurance, along with steps to help you mitigate against those effects if they drive your premiums up.

How much (more) the young and old pay

To quantify the impact of age on premiums, ValuePenguin gathered quotes from more than 20 companies for drivers of 15 different ages, ranging from 16 to 85. Our data revealed that the youngest and oldest drivers in our sample would pay significantly more than drivers in the middle.

Based on quotes obtained in 2015 from more than 20 companies for drivers, both male and female, of the ages shown driving a 2015 Toyota Camry for 12,000 miles per year, opting for liability of 25K/50K/25K (bodily injury/accident total/property), along with collision and comprehensive coverage. Quotes were obtained for a representative city in each of New York, California and Michigan, and may not represent the premiums you might pay where you live. The quotes we received for 16-, 17- and 18-year-old drivers were more than three times as high as those for 55-and 65-year-olds, and more than double those for drivers in their 30s. Once young drivers gain more experience at the wheel, the data shows, their car insurance costs will drop by about 30% at age 25.

Indeed, all other factors (such as an absence of accidents or claims) being equal, costs should generally decline for most drivers with every birthday until they reach their late-50s. At about age 60, the trend in premiums reverses, and those begin to increase slightly every year, albeit to rates that may still be less than the driver paid when he or she was in their 30s or 40s.

These differences in premium aren’t due to age discrimination or caprice on the part of insurance companies. Rather, they’re based on data reflecting thousands of accidents and who was involved in them.

Those statistics include the fact that, according to the Insurance Institute for Highway Safety (IIHS), drivers between the ages of 16 to 19 are three times more likely to be in a car accident than the typical driver. Further, in 2015 drivers between the ages of 15 and 20 comprised 7% of licensed drivers and yet accounted for 10% of all fatal accidents.

Drivers age 70 and older have lower crash rates per mile traveled than young drivers, but higher ones than middle-aged drivers, according to the IIHS. And they’re more likely than most drivers to die in a crash. Per mile traveled, fatal crash rates increase noticeably starting at age 70-74 and are highest among drivers who are 85 and older, according to a 2015 study in Accident Analysis and Prevention, an industry journal.

All of the data we cite, and more, is used by insurers to determine the risk of filing a claim posed by a particular driver. And that risk, in turn, is reflected in the premiums those companies charge. For the most part, the patterns we noted in our premiums data track with those for the premiums we gathered.

Steps to Save

There’s nothing you can do about your age, of course, but some smart moves can help you minimize its impact on the auto premiums you pay.

Shop Around. As with drivers of any age, shopping around for insurance on an older or younger driver is well worth the required time and effort. In particular, certain companies offer more favorable premiums than others for insuring young drivers, as we revealed in our study of the best car insurance for teens. We recommend getting quotes from at least three companies, though the more the better. Most large insurers let you request a quote online, which allows you to easily compare prices.

Seek Out Discounts. Drivers young and old (and usually anywhere in between, too) can save up to 10% on their car insurance by taking defensive driving or other driver re-education courses.

For young drivers, price breaks are often available if you maintain good grades, which are defined as either a B overall, a 3.0 GPA, or a ranking that places the student among the top 20% of his or her class. Many companies offer discounts to drivers who are retired, and thus not racking up miles in grueling commutes; for example, Allstate offers a "55 and Retired" discount which gives drivers who are 55 or older an automatic 10% discount. If you’re driving less each year because you live on campus or are no longer commuting daily for work, update your policy. Lower mileage can translate into savings too.

Join The Family Policy. Adding a child to the family’s car insurance may not be cheap, exactly, but it is cheaper--by about half, according to our research--than getting them their own policy. That’s because parents are taking on part of the risk posed by that young driver, so the insurance companies are willing to offer a price break for that shared liability. As with so many other aspects of insurance, there’s a reward to sharing.

This content originally appeared on ValuePenguin.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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