Auto insurance is a significant expense. The average American driver spends more than $1,500 to insure their vehicle. Insurance rates depend on a number of factors. Some factors may include the driver’s driving history, the gender of the insured, the type and value of the car driven, the amount of driving the insured typically drives and the credit rating of the insured. One other important factor that can dramatically affect your car insurance rates is your age.
How your age affects your car insurance rates depends on the insurance company. A few of the top car insurance companies do not let this factor dramatically affect the cost of your insurance premium. However, many insurance companies use your age as an important factor in determining what your insurance premium will be.
Different Ages Pose Different Risks
Most insurance companies base their rates off of tables that express the potential risk of an accident from extensive statistical data. These actuary tables that the insurance company uses as a basis for your premiums is the most significant consideration in how your age affects your car insurance rates.
The tables typically demonstrate that young people, especially teenagers, are more likely to get into accidents and cause damage. The instances of drug and alcohol related accidents is also higher for this demographic. If you have a teenager on your insurance policy, your rate is likely to be considerably higher than someone without a teenager on her insurance policy because the insurance company must compensate for their perceived risk of insuring a teenager.
Some states have enacted laws that prohibit young drivers that are under the age of 18 from driving with other passengers under 18. These laws have arisen out of a link that has been detected between the additional accidents that occur when teen drivers are driving a vehicle with other teen passengers. Texting while driving is a new risk that emerged that contributes to a large amount of accidents.
Other young people must endure these increased rates, as well. Most drivers under 25 years old have to pay a higher rate because of their age. However, some circumstances and discounts can lower this rate.
Finding Ways to Save
If an insured driver is young, but married, he will often pay less because married people statistically have less accidents. Similarly young females typically pay less for insurance rates than male drivers because males have more accidents and more fatal accidents than female drivers. Teenagers are a risky sector to insure, but they, too, can mitigate their parents’ insurance rates.
Some insurance companies allow for discounts for teenagers that have good grades since higher grades may indicate less risk taking and a more serious driver. Other companies offer a slowly reduced premium for each year that the young driver goes without an accident or driving violation. State laws may also change the increased rates associated with young drivers.
Seniors can also be required to pay a higher premium because of accident risk factors. Seniors are more likely to get into accidents due to health reasons or poor vision. Therefore, they typically pay more for insurance premiums than drivers between the age of 25 and 60.
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