Does car insurance really get cheaper with age?

According to Moneysupermarket motor monitor (June 2012), there is indeed a decrease in overall car premiums with age. While there has been a general decrease (about 5.1-6.8 percent) in car premiums over the years, the age group 20-24 have seen the slightest decrease while those aged between 24-29 years had the biggest drop in premiums. Ironically though, the premiums’ of those aged between 17-19 years dropped only by 2.7 percent while those aged 65 and above benefitted from a 14.5 percent drop.

Insurance companies seek out some information in relation to the risks of accidents and damage before coming up with the proper vehicle coverage such as age, gender (though based on the European legislation 2012, there can no longer be discrimination based on gender for vehicle cover), type of vehicle, area in which the person lives and drives. Basically the lower the risks of making claims, the lower the premiums.

The link with car insurance and age is the fact that young drivers tend to be more involved in car accidents, have their car damaged or stolen than mature drivers. Car insurers, to be on the safe side from giving out money, thus always put the youngsters on the red list. Also, because young ones have just started out driving, they still have to build the no claims bonus benefits.

Over time as the driver gets mature on the road, the car premiums also decrease. A 40 year old driver (with no claim history) will find his coverage less than that compared to a 25 year old driver while a 17 year old driver will find his premiums considerably higher than that of the 25 year old simply due to a lack of road experience. This is why the age group 65 and above has the lowest premiums simply because of experience.

One way for youngsters to reduce car premiums is to add an adult with no claims history to the insurance cover. Though not all insurance companies offer this incentive, it’s worth a try for those aged between 20-29 years. But in no case should the adult put his/her name as the main driver for the insurance cover; in case the insurer finds out if any claim is to be made, the company will not pay out and is considered legally as fraud.