At what age does car insurance get cheaper?

Insurance premiums are a measure of how risky and expensive an insurer believes you’ll be to cover. How likely are you to submit a claim and how costly will that claim be? Insurers regard young, inexperienced drivers as the riskiest customers and their own data, and that from the Department for Transport and road safety charity Brake, confirms this.

In 2019, drivers between 17 and 24 accounted for 7% of all licence holders but were involved in 16% of fatal and serious crashes, government data shows. 

In fact, one in five drivers crash within a year of passing their test, according to Brake. The charity notes that among all motorists, young people are the most likely to engage in risky behaviour such as speeding, driving under the influence of alcohol or drugs, and using their mobile phones behind the wheel. They also commonly carry large numbers of passengers and drive at night and without seatbelts. 

Some of those behaviours lead to tragedy: 248 young people aged 17 to 24 were killed in road traffic accidents in 2019, with hundreds more seriously injured. Other collisions simply end in damaged cars and property. In either case, insurers will pay out, sometimes huge sums.

Drivers under 20 are the most likely to claim on their motor insurance, with over 9.5% submitting claims in 2020, the Association of British Insurers (ABI) said. Their claims are also more likely to be for large sums of money, averaging over £5,500, the ABI said. In comparison, drivers between 31 and 75 show claims frequencies as low as 4.7% and claims values as low as £2,948 and consequently enjoy cheaper premiums, the insurance trade body said.

On average, drivers will see their premiums begin to fall around age 25. This reflects the lower risk posed by drivers in their mid-20s as they gain driving experience and maturity, compared to a 17-year-old who has just passed their test. The premiums paid by drivers in the second half of their 20s will still be higher than those paid by older drivers but should be lower than those faced by novices.

But personal circumstances may mean you have to wait still longer to see cheaper premiums. If you’ve been involved in a collision, accrued points on your licence, or simply had to claim on your insurance for another reason, your premiums may remain high even after you turn 25.

Other factors that insurers consider when calculating your premiums - such as your address, occupation, car, and mileage - may also keep your premiums high. If you start work in a profession that insurers regard as risky, such as security guard or delivery courier, move to an area with high rates of auto theft, or buy an expensive, high-powered car, your premiums may stay high past your 25th birthday.

If you keep a clean driving record, your insurance costs should continue to fall throughout your 30s, 40s, and 50s. But you won’t benefit from the cheapest premiums until you’re in your late 60s. The ABI says drivers in the 66 to 70 age range pay just £279 per year for their insurance on average, reflecting their low claims frequency and low claims value. By that point, you should be experienced behind the wheel and able to avoid accidents. If you haven’t had to file insurance claims, you’ll also benefit from a hefty no-claims discount.

Car insurance premiums begin to inch up again in your 70s, as health conditions such as failing eyesight begin to impact accident rates. Insurance prices may rise even more steeply in your 80s, particularly as some insurers withdraw from the market and you’re left with fewer quotes to compare.

As a young driver, you’ll just have to accept a few years of elevated insurance costs. But you can take steps to ensure you don’t pay more than you need to:

• Get a black box insurance policy: These policies install a telematics device in your vehicle to record your driving behaviour. If you demonstrate you’re a safe pair of hands, contrary to your insurer’s assumptions about young drivers, you can earn discounts on your premiums. Black box policies are generally the cheapest option for young drivers.
• Add a named driver: If you add an experienced driver such as a parent to your car insurance policy as a named driver, insurers will assume you spend slightly less time operating the car and lower your premiums.
• Choose the right car: Inexpensive, light cars are the cheapest to insure and can save you hundreds annually when compared to high-powered, flashy vehicles.
• Build up a no claims bonus: If you haven’t filed claims for a few years, you’ll be rewarded with a discount on your insurance premiums. Most insurers allow you to transfer your no claims record so you aren’t tied to one provider.
• Shop around: Don’t simply auto-renew your insurance policy out of convenience. Instead, compare quotes to see if you can get a better deal from a competitor.