Age tops the list of factors insurance companies use to determine premiums. While there are good drivers in every age category, statistics show that younger and older drivers tend to be riskier on the road — and this impacts what they pay for insurance premiums. If you belong to one of these age groups, or you have a family member who does and you pay for their insurance, it can be helpful to understand exactly what role age plays in the way an insurance company determines premiums for drivers based on age. Read on to learn more.
What Influences Auto Insurance Premiums?
When auto insurance companies price their policies, they use a variety of factors to determine premium amounts.
Age
Younger drivers may have higher insurance premiums. According to the Insurance Institute for Highway Safety, teenagers have accident rates nearly four times those of drivers older than the age of 20. This is due to a variety of factors, including inexperience, driver errors, and riskier behaviors such as speeding.
Gender
Young male drivers top the risky driver list, and this group has the highest insurance premiums overall. The American Automobile Association’s Foundation for Traffic explains that young men exert more risky behavior on the roads than young women. The National Highway Traffic Safety Administration reports that men under 25 are three times as likely to be involved in a fatal car crash as women the same age.
Driving Record
If you’re accident-free, it may be an indicator that you have good driving habits. Insurance companies often reward drivers who stay accident-free. It’s another reason to practice responsible driving habits while on the road.
Driving Habits
Do you use your car for business? The more miles you put on your vehicle, the greater the chance of potential issues can be. Policies are often underwritten based on how much you drive; it’s worth considering this if you’re a remote worker who rarely takes your car out of the garage. Of course, an insurance company also looks at where you live and may adjust premium costs if you’re in higher-risk areas for vandalism, theft, and collisions.
Other Factors
Insurance companies may use other determining factors when calculating premiums. Marital status, good student status, credit history, and other characteristics can impact your final cost.
How to Lower Your Auto Insurance Premiums
With thousands of auto insurance companies around the country vying for your business, there are things you can do to keep your premiums as low as possible after you sign up for coverage.
Increase Your Deductible
If you’ve had your policy for a while, review it and drop any unnecessary coverage, increase your deductible, or reduce coverage limits as you deem appropriate. Your insurance agent can discuss pros and cons for these options and help you make the best decision to suit your needs.
Take Driving Courses
Many states offer driving programs that can help you lower your insurance premiums. Your insurance agent can discuss easy ways for a teen to learn more and become a better driver in the process.
Ask for Discounts
Insurance companies typically offer a variety of discount programs to help keep your premiums as low as possible. See if you can create an umbrella policy with one company to meet all of your insurance needs. Good student discounts can help, and you can ask for lower policies while your child is away at college and no longer driving while on campus. Military discounts, anti-theft devices, and accident-free driving can all make a difference. Ask your agent for complete details.
Shop Around
It’s easy to fall into a pattern and stick with the same company out of convenience. Shopping around can be an effective way to lower your auto insurance premiums. Instead of paying your next premium, compare quotes from at least three companies. Many larger companies offer easy quote options online so you can quickly compare rates.
Resource Links
“What age does car insurance go down?” via Progressive
“Older drivers” via IIHS
“Does Car Insurance Go Down at Age 25?” via ValuePenguin
“Teenagers” via IIHS