UPDATED: Mar 13, 2020
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Age has a significant impact on car insurance premiums. You may have heard that drivers in their 40s and 50s pay the least for car insurance.
Is it true that drivers in their 40s and 50s have the lowest car insurance premiums? Or is this just another myth? Let’s take a closer look at whether or not there’s a ‘golden age’ for car insurance.
Yes, Drivers in Their 40s and 50s Tend to Pay the Least for Car Insurance
Generally, drivers in their 40s, 50s, and early 60s pay some of the lowest rates in America for car insurance.
The reason for this price drop is simple: decades of driving statistics have shown insurers that drivers in this age range make fewer claims than older or younger drivers. Statistically, they’re some of the safest and most experienced drivers on the road.
Drivers in their 40s and 50s are also in the ‘sweet spot’ of physical driving prowess. Drivers in their 70s, 80s, and 90s can suffer from poor reflexes and slow reaction times. They might have worsening eyesight and hearing. All of these attributes can increase the likelihood of getting into an accident.
Car insurance premiums tend to drop after age 25 and into your early 30s. They tend to drop even further in your 40s and 50s. By the time you enter your 70s, premiums start to rise once again.
Age is One of Several Factors Impacting Car Insurance Premiums
Yes, drivers in their 40s, 50s, and 60s tend to pay some of the lowest prices in America for car insurance. However, age is just one of several major factors that go into calculating insurance premiums.
A 55-year old driver isn’t guaranteed to pay lower car insurance premiums than a 25-year old driver. If the 55-year old driver has an at-fault accident, a DUI, and a speeding ticket on her record, while the 25-year old driver has a clean slate, then the 25-year old may pay significantly lower premiums.
Other factors that can affect car insurance premiums include:
Gender: Gender has a huge impact on car insurance premiums. Statistics show that men and women have different claims rates. Interestingly, this trend flips with age. A young male driver, for example, has a higher claim rate than virtually any other demographic, which means young men pay higher insurance premiums than young women. As drivers reach their 40s, 50s, and 60s, however, this trend flips: women in this age range have a higher claims rate than men, which means women in their 40s, 50s, and 60s tend to pay slightly higher insurance premiums than men. At any age, gender plays a significant role in the cost of your car insurance.
Driving Record: Understandably, your driving record plays a huge role in the cost of car insurance premiums. A driver with multiple at-fault claims on his driving record, for example, will likely pay higher insurance premiums than a driver with a clean record. Speeding tickets, at-fault accidents, car insurance claims, and other items can all impact car insurance premiums.
Your ZIP Code: The place where you park your car at night has a big impact on car insurance premiums. Certain ZIP codes have higher rates of accidents, insurance claims, vehicle thefts, and vandalism than other areas. Based on your ZIP code, your insurance premiums could change significantly.
Your Vehicle: Obviously, the value of the vehicle has a big impact on insurance premiums. It costs more to repair a $50,000 SUV than a $10,000 car, generally speaking.
Vehicle Safety Features: A vehicle with a strong safety rating tends to have lower insurance premiums than a vehicle with a weak safety rating. Safer vehicles are associated with fewer passenger injuries. That means the insurance company is required to cover fewer medical bills in the event of an accident. Some drivers are surprised to find insurance premiums actually go down when buying a new vehicle because the new vehicle has better safety features than the older vehicle.
Your Annual Mileage: Someone who commutes two hours to and from work each day has a statistically higher chance of being involved in an accident than a driver who works from home and drives at non-peak hours. Insurance companies use your annual mileage to determine premiums. Drivers in their 40s and 50s may be working full-time. If you work from home, however, or if you’re planning to retire soon, then your car insurance premiums could drop with your annual mileage.
Discounts: Bundling discounts, safe driving discounts, and other discounts can all affect the cost of car insurance premiums in your 40s and 50s.
Coverage Limits: Drivers in their 40s or 50s may be more risk-averse than other drivers. They may wish to have umbrella insurance or higher coverage limits. This can significantly affect car insurance premiums. Higher car insurance limits means more costs for your insurance company, which means higher premiums.
A Teen Driver Can Significantly Raise Car Insurance Premiums for Drivers in Their 40s and 50s
Drivers in their 40s and 50s may be enjoying cheap car insurance premiums – only to find those car insurance premiums disappear when a teen driver gets added to the policy.
Do you have kids? Did your kid just get a driver’s license? If so, then your car insurance premiums could double or even triple. Teenage drivers have some of the highest claims rates in the world. Insurance companies will raise your premiums significantly to cover the added risk.
Instead of paying, say, $100 per month for car insurance as a driver in your 40s or 50s, you might pay $200 or $300 per month after your teen driver gets his or her license.
Of course, that doesn’t mean your cheap car insurance in your 40s and 50s gets completely ignored. Safe-driving parents tend to raise safe-driving teenagers. Drivers in their 40s and 50s also tend to drive more safely with family members in the vehicle. Yes, a teenage driver on your policy is always going to raise car insurance premiums – but you can still save thousands of dollars on car insurance as a driver in your 40s and 50s.
Generally speaking, drivers in their 40s, 50s, and 60s pay some of the lowest rates for car insurance in the United States. After age 30, premiums tend to remain fairly low for the next few decades. By the time drivers reach their early 70s, premiums may start to increase. As a driver in your 40s and 50s, however, you can pay some of the lowest possible car insurance premiums.