Written by, Marija Petkova
Updated July, 4, 2022
If you’re a first-time driver or have only had your licence for a couple of years, chances are you’re paying more for car insurance compared to more experienced drivers.
But, how does age affect car insurance premiums, what are the ways to reduce them, and does car insurance go down at 25?
Read on to find out.
Insurance companies consider age as one of the main factors for determining car insurance premiums because statistics show that certain age groups are more (or less likely) to be involved in accidents.
Young people pay more for insurance, compared to other age groups, because they are riskier to insure. They have less experience and are more likely to engage in distracted driving and reckless behaviour, which means they’re also more likely to get into an accident and make a claim.
Even if you’re a safe driver and you could somehow prove that to your insurer, you’ll still have higher premiums than people in their 30s, 40s, and 50s. Part of the reason for that is that they had more time to build up a no claim discount, which can make a big difference in what you pay for insurance. Even a first time speeding ticket may affect insurance.
People usually start to see the cost of their insurance premiums reduce around the age of 25. The price begins to decline around that age and continues to go down until around the age of 60.
For most people, car insurance is more expensive the younger you are.
As a rule of thumb, the cost goes down when you enter a new decade. For example, people in their 30s pay more than people in their 40s, and they have a higher car insurance bill than people in their 50s.
Once you reach 60, your insurance premiums will start to rise again.
According to numbers from 2020, reported by Statista, which show the average car insurance cost in the UK by age, 20-year-olds paid an average quote of around £850, 15% more than 25-year-olds, who paid an average of £720.
People in their 50s paid the lowest average insurance cost by age, with an average quote of £468, which is around 30% less than that of 25-year-olds.
In 2012, the European Court of Justice (ECJ) introduced a new rule which prohibited insurers from considering the gender of their customers when setting insurance premiums. The court ruled that taking gender into account contradicts the laws on discrimination.
However, men still pay more for car insurance than women. According to figures from MoneySuperMarket, men paid an average of £581 between January 2018-2020. Female drivers paid 26% less for car insurance or an average of £460.
But, the gender gap in car insurance rates has less to do with gender and more with factors like claim history, type and value of the vehicle, driving offences, and occupation. Statistically, men drive more powerful and expensive cars than women and they are twice as likely to make a claim.
Age is just one of the many factors that insurance companies look at when calculating the cost of a customer’s premiums. They also consider:
If the car you’re driving is more expensive, your insurer will have to pay more for repairs in case of an accident. Making modifications to your car could also affect insurance costs.
Fully comprehensive insurance is the cheapest type of car insurance for most people. Third-party only, which is the most basic insurance a driver can get in the UK, is often the most expensive.
Driving offences, points on your licence, and past claims can all affect the cost of your premiums. Most insurance companies look at the last 5 years of your driving history and will offer you a no claims bonus if you haven’t made any claims, which could help reduce the insurance costs.
If you have a job that requires spending more time on the road or driving at night, you’ll be considered riskier to insure, which will increase your premiums.
Your place of residence indicates the likelihood of having an accident, as well as how much it might cost. The insurance company will look at traffic trends, population density, crime rates, and the number of accidents in the area to set a premium.
Here’s what you can do to reduce the cost of your car insurance:
To find the cheapest deal possible, you should shop around for insurance and compare quotes and prices from different providers.
Reducing the amount of time you spend on the road means you’re less likely to get involved in an accident and could help lower your premiums.
Insurance companies give an extra year of no claims discount for every year you drive without making a claim, which significantly reduces the cost of insurance.
Fitting safety features, like an immobiliser or an alarm, will reduce the chance of your car being stolen, which will make you less of a risk in the eyes of insurance companies.
If you were wondering ‘at what age does car insurance go down?’, the answer is around 25. Insurance costs go down as you get older, because insurance companies see you as less of a risk, but keep in mind that age is not the only factor that plays a role in calculating your premiums.
Your driving history, the model and type of the vehicle you drive, and your occupation can significantly affect the price of your car insurance.
Spending less time on the road, a cheap car with a small engine, a no claims bonus, extra security features, and a safe neighbourhood can all lower the cost of your premiums.
Insurance costs start to decrease around the age of 25 for both men and women.
You should see the cost of your insurance dropping once you turn 25. You can also lower your premiums by limiting your mileage and avoiding modifications to your car.
For most, the cost of car insurance will go down once they’re no longer classified as a young driver, which is around the age of 25. The cost of your insurance should reduce but only if you maintain a clean driving record and build a no claims bonus.
My name is Marija, and I'm a financial writer at DontDisappointMe. Although finance might not be everyone's cup of tea, my 10+ years of working in one of the biggest banks in my country, and my interest in extensive research on everything finance/investment-related, have made me somewhat of an expert in the field (if I do say so myself). No longer having the passion to work in a corporate setting, I decided that I couldn't let all of this knowledge go to waste so I started writing. And, here I am! Today I try to share my knowledge with my audience in the hopes of making this topic as simple and interesting as possible. In my leisure time, I like spending time with my family and travelling to new locations.