How does age affect a car insurance premium?
Not surprisingly, young drivers between 18 and 20 pay far
and away the most for their car insurance cover, owing to a combination of
inexperience, overconfidence and hormones. For many of them,
comprehensive cover can cost well into four figures. Assuming that the driver picks up
no accidents or convictions there is a sharp drop in premiums from around 21
onwards, with a gradually flattening out curve until the motorist reaches
the early to mid 50s when it plateaus somewhat, falling to its lowest level
between about 65 and 70 (see
over-50s site oversixties.co.uk) This is reckoned to be caused by the fact that 65
is the most common retirement age and a time when many people, saved the
daily commute to work but hampered by a lower income, tend to cover a lower
mileage. The mileage that they do cover is usually at a safer time, to. They
do not have to battle through heavy traffic every day, and if the weather is
bad they are far less likely to be out on the road than someone who has to
get to work or to a business appointment.
From the age of 70 there is a gradual increase, and this is caused mainly by
the afflictions of age. Older drivers do not have the same fast reactions of
a younger motorist, and their vision and hearing may have deteriorated also.
This gradual increase continues until their 90s, by which time the vast
majority of motorists have either given up driving or already passed on to a
better world than this! It is interesting to note however that the average
premium paid by a 90-year-old is still less than that paid by the average
30-year-old. Perhaps age has some benefits after all.
What is the cheapest age for being on the road, then? Certainly motorists
between the ages of about 50 and 75 appear to have the lowest likelihood of
being involved in a car accident. When they are involved in accidents there
is usually less damage caused to both their own cars and to third parties,
since these accidents tend to occur at a lower speed than those of younger
drivers. Since car insurance premiums are based upon the likelihood of the
insurers making a profit out of the premium, this group is far away the most
profitable for them of all.
It would be good to say that as a consequence the over 50s enjoyed the
cheapest premiums. This may well be true but they are not as cheap as they
should be, bearing in mind the far lower risk that the older motorist
presents to the insurer. This is because many mature motorists are
comfortable with the cost of their insurance policies, which represent a far
lower percentage of their available income that it would to a younger person
who would not only be likely to earn less but would also have high outgoings
as a result of the expenses of buying a house and bringing up a family. Over
50s therefore do not shop around for the best car insurance bargains in the
way that a younger motorist would. As a result many of them are paying far
more for their motor insurance policies than they really should. The moral
to this story is obvious....
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