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How does age affect car insurance premiums?

How does age affect car insurance premiums?

The age and gender of a driver are two crucial factors when calculating the premium, which is the cost of car insurance. However, your location, the car you own, and your driving history also affect car insurance premiums. Your age can only give you a rough idea of whether your premium may be higher or lower. For instance, drivers in their 40s with over ten years of driving experience probably pay the lowest premiums, especially if they drive a popular car model and have filed little to no insurance claims. Consider using an online car insurance calculator to understand how age or any of the other factors affects car insurance costs.

At what age does car insurance go down in cost?

In Australia, a significant number of road accidents involve younger male drivers below the age of 25. This statistic almost guarantees that any male driver aged 18-25 pays among the highest costs of car insurance in the country. But once you cross 25, you are no longer considered as much of an accident risk, and your insurance premiums start trending downwards. Typically, the age range of 26-69 may be seen as the golden period in which car insurance rates decrease with age. You should remember that this may not be true for everyone in that age group, as there may be other reasons for charging the driver a higher premium. 

If you’re wondering what age car insurance goes down for male drivers, the answer is commonly 25. For the most part, female drivers pay less for car insurance than male drivers.  This difference can be more pronounced among younger drivers than among drivers in their 30s and 40s.

You can take a few steps to lower your car insurance costs such as continuing to drive responsibly and maintaining an incident-free driving history. Taking precautions to safeguard your car, especially if you live in a neighbourhood with a high crime rate, can also help. It’s also important to ensure you abide by the terms and conditions of the insurance policy. For instance, be sure to avoid lending your car to unlisted drivers unlikely to drive responsibly, and don’t  modify your vehicle in ways that can increase the risk of accidents. You may want to check from time to time if switching your insurance provider can lower your premium.

How much does old age affect car insurance rates?

Many Aussie seniors continue to be in excellent health well into their 70s. However, for the insurance industry, they are prone to age-related illnesses which puts them at greater risk of being involved in an accident while driving. Also, seniors may need to pass several medical tests before they can renew their driving license, which adds an additional risk from an insurer’s perspective. These risks translate into seniors having to pay more for car insurance. However, seniors may qualify for lower premiums if they agree to specific conditions such as driving only during daylight hours or staying off freeways when driving.

One way of avoiding steep car insurance premiums is by opting for a ‘pay as you drive’ policy, which allows you to pay for the kilometres you drive with a short-term car insurance policy. This type of policy is suitable for seniors who only expect to drive when absolutely necessary or once in a while. But both standard insurance policies as well as ‘pay as you drive’ policies can require seniors to pay a higher car insurance excess, which brings down the insurer’s share of the compensation to be paid in case of an accident. You may need to check if you can afford this excess before buying the policy.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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