How does age affect auto insurance?
Car insurance providers use a mix of different variables to decide on the exact cost of your policy. One of the key players is your age. While this might seem like discrimination, age determines a number of things for insurers, including driver safety, based on national and global statistics and research. Age, on average, is also a decent indication of driver experience.
Teen and new drivers
Unsurprisingly, those who fall into the teenager or new driver category are the ones who pay the most money for car insurance policies. For the most part this is down to a lack of experience compared with older drivers who have been behind the wheel for some time. This is especially true for young male drivers, who will see an even higher rate as the result of statistics revealing a significant increase in the amount of accidents initiated by males between the ages of 16 and 30 against women of the same age group.
In fact, according to the Insurance Institute for Highway Safety (IIHS) teenagers drive fewer miles than most adults but have still accumulated a much higher rate of crashes and fatalities. Furthermore the rate of accident-related deaths per mile among 16 to 19 year olds is three times higher than for drivers over the age of 20.
Inexperience can lend itself to a number of factors which can contribute to accidents including increased tendency to speed, a lack of awareness about what to do when faced with a serious situation while behind the wheel, and a lesser attitude towards wearing a seatbelt.
If you are a young or inexperienced driver and are hoping to save some money on insurance you can invest in a car with good safety features or consider going through driver’s education. Some car insurance providers also offer student driving discounts.
Is 25 the magic number?
Rumour has it that once you hit the magic age of 25 your insurance rates plummet and you begin to make incredible savings. Now this is, in part, true, but is also simultaneously a bit of an auto myth- are you intrigued?
Basically between the ages of 25 and 65 your car insurance rates should decrease as the result of more experience and more time spent on the roads- just as long as you keep your record clean. However, you can also start seeing savings from the age of 21 if you have garnered enough experience. In fact, you will see little difference between the ages of 24 and 25 so long as you have a wealth of good experience and no claims.
Case Study:
A female driver who lives in downtown Toronto, drives a 2010 Mini Cooper 2 door and commutes to work 5km daily. On average she driver 10,000km per year and also drives for recreational purposes.
At 24 years old her insurance would be an average of $125.92.
At 25 years old her insurance would be an average of $115.83.
So as you can see, that is only a leap of around $10, and that is mostly as a result of driving experience. If you decrease the female’s driving experience by just one year at 25 years old she will pay an average of $127.75- slightly more than a more experienced 24 year old driver.
Other areas that impact your insurance during these years include the make and model of the car you drive, where you live and park your car, whether you commute to work and how many miles you drive yearly.
65 and over
The age for increasing insurance policy costs is mostly down to the insurer that you are with, as well as your experience, car and claims history. However, the youngest age that rates can begin to increase again is around 65, but can be as late as 80 years old. In this case its best to search the market to find an insurer that suits your needs.
Rates typically begin to increase as the result of a broad range of general ailments more common in older drivers including impaired vision, poorer cognitive functioning, changes in physical functioning and frequent use of prescription medications.
If you are an older driver that is hoping for a lower insurance rate, you should drive safely and maintain a clean record, consider taking a driving course or look into senior car insurance discounts available from certain insurers.