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Knowledge Hub

This is How Age Affects Your Car Insurance Premium

5 min read

This is How Age Affects Your Car Insurance Premium

Motoring and Travel June 22, 2022

What do you think about on your birthday? Food, family, friends? Chances are, you’re probably not thinking about what you pay for a car insurance premium? But did you know that age plays a role in your monthly insurance premiums and that your insurance company uses your age (amongst other factors) to work out what to charge you?

Does your age affect your car insurance premium?

Yes, on average, younger drivers do pay more for vehicle insurance. This is because a car insurance company will work on risk factors. This means that they will assess the probability of the policyholder having a car accident. Lifestyle, credit ratings, and gender[1] are also some risk factors that are considered when calculating one’s insurance premiums.

If you’re under the age of 25, your car insurance premium may be slightly higher than the premium for an older driver. It doesn’t matter if you are both driving similar cars, live in the same area or have the same type of vehicle security. Why? Simply because a younger driver with their first car probably has less driving experience on the road[2] than an older driver. So, the older driver may receive a discount based on experience.

Globally, there is evidence that supports this theory. The Association of British Insurers cites a government study[3] which says, “Drivers aged 17-24 only make up 7% of UK licence holders and drive fewer miles than the average but are involved in 24% of all fatal collisions.”

However, while the statistics tell part of the story, the question of ‘why’ arises. What are the reasons for accidents in the under-25 age group? The British road safety charity, Brake[4], lists the following reasons for car accidents:

Speeding
peer pressure
mobile phone usage
drunk driving

However, it’s not all doom and gloom. Drivers under the age of 25 may pay higher premiums but they are also qualify for really great discounts at a later stage by building up a good driving record. Fewer accidents and traffic violations will ultimately demonstrate responsible driving behaviour to insurers and this is likely to have an impact on one’s car insurance premium in the future.

Do premiums increase with age?

This is a yes and no answer. Statistically speaking, those drivers who are between the ages of 30 and 60 bracket, are expected to have more experience on the road and, as a result, less likely to be involved in car accidents. Subsequently, this age group are inclined to pay a lower insurance premium.

However, it’s not all plain sailing. It’s important to note that driver behaviour still plays a vital role in determining how much insurance will cost you. If you are a reckless driver who doesn’t abide by the rules of the road, you will find that your car insurance premium will increase regardless of your age. The 30-60 age group may also tend to have more access to funds and may be in a better position to buy more expensive vehicles with high-tech features. Their insurance rate may then be calculated by the value, make and model of their vehicle.

However, once you are in your mid-60s, diminished eyesight, slower reflexes and conditions, such as arthritis, are among the reasons why insurers may choose to increase insurance premiums for elderly drivers. It is important for all drivers, including elderly drivers, to read the terms of their insurance policy closely. Drivers over the age of 70 may find that they have to provide a medical certificate to prove that they are still fit to drive as a condition of renewing their cover.

On the plus side, pensioners can and should ask their insurance companies about discounts as these may be available and could help decrease the overall cost of their insurance.

For more information about how to lower your insurance premiums, take a look at our 10 Proven tips to help reduce your car insurance premiums.

Monitoring driver behaviour could reduce insurance premiums

While it's true that a car insurance premium is influenced by your age, recent improvements in technology have made it easier for car insurance companies to monitor driver behaviour using apps and other devices. As a result, good drivers may be in line to receive discounts, rewards, and cashbacks on their insurance premiums. Plus, many car insurance apps now offer information to motorists on how to improve their driving skills. So anyone, regardless of age, can still take the opportunity to learn something new.

Get a car insurance quote from Dialdirect

Get cover from a car insurance company that understands your unique requirements. You can trust Dialdirect, which offers some of the best car insurance policies for both young and older drivers, for their vehicle insurance. Sign up for the Dialdirect Monthly Payback with your comprehensive car insurance policy and drive your way up to 75% cash back monthly in just three easy steps.

Sources:

[1] Supaquick: the main factors influencing car insurance premiums for young people

[2] Arrive Alive: car insurance and road safety

[3] ABI: Why is my car insurance so expensive?

[4] Brake: Why young drivers are at risk and what can be done about it?

Value Penguin: how age affects car insurance costs

Autopedigree: car insurance for young drivers

Nerd Wallet: average car insurance rates by age and gender

The Balance: car insurance rates by age

Disclaimer: Dialdirect Insurance is a licensed non-life insurer and financial services provider. Terms and Conditions online. Long-term insurance policies are underwritten by 1Life Insurance Ltd, a licensed financial services provider and life insurer