How Age Relates to Car Insurance Premium Pricing

Drivers can expect the lowest rates after age 40 and before age 90. (automedia.com)

A multitude of factors are used by car insurance companies to rate drivers and develop their premium costs. We’ve talked at great length on how the make and model of the vehicle one drives, the zip code they park in every night and even the miles driven each year all get factored into a premium.
Insurers look at a number of driver-related items that can be controlled: the driving record of a motorist and claims history, for example. That means if you’ve had moving violations, at fault wrecks or something as onerous as a conviction for driving under the influence, you can expect to pay higher premiums. If you’ve filed numerous claims, at fault or not, you can also expect to see higher premiums than the average driver.
The insurance companies also take into account the age of a driver and use it as a rating factor. Like our genders, which we’re born into, drivers have no direct control over the chronological process of how they age, since it’s dependent upon making rotation after rotation around the sun, year after year after year.
Age is a key rating factor, and impacts the average driver’s premium cost. And according to a new report published by Fox News, the “sweet spot” concerning age for obtaining the lowest car insurance rates occur after a driver hits 40 years of age, and continues throughout a driver’s lifetime, although rates being climbing back up after hitting the age of 70 or above.
Those results were determined through a two-year analysis of almost 200,000 car insurance quotes. As expected, the highest rates were for teenage drivers, with 16 year old motorists seeing an average annual premium of $4,075. And just the passing of a single year sees drivers at age 17 saving more than $500, with an average annual premium of $3,564.
The biggest difference for young drivers occurs during the eight year timeframe it takes them to hit age 24, and by that time, the average car insurance premium has dropped by more than half, coming in at $1,749 annually.
The process involved in setting an age-related premium is a surcharge based on driving inexperience. Fox News says that one major car insurance company in California charges a newly-licensed 16 year old drive at a rate that’s 1.9 times their base premium. And by age 25, drivers can expect the surcharge to disappear completely, followed by discounts off the basic rate after reaching 10 years of driving experience.
So what age sees the lowest average premium cost? That’d be drivers at 65 to 69 years old. Their average annual premium is just $1,138, just 28 percent of what a sixteen year old driver would pay. However, drivers can expect rates to begin rising again after crossing the threshold of 70 years old.
The subsequent increases as a driver ages are a result of the mental and physical changes that accompany growing older. Some of the most common of these include: declines in vision, stamina, strength and quickness. Yet most aging drivers are able to not only recognize these changes, and even employ techniques to compensate for these declines.
But all is not lost, and there are ways for older drivers to save on their premiums. According to the National Association of Insurance Commissioners (NAIC), more than 30 states have mandated discount requirements on the books just for senior drivers who take online driving courses such as the one offered by the AARP. These classes can also benefit younger drivers as well.
Below, we’ve included a handy chart that demonstrates how a driver’s age relates to an average premium based on the study cited by Fox News.


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