Policyholders love to see premiums drop at renewals and this post explains what makes them fall. It is a fairly general question and we will try to break it down below. Rates may gradually come down in many stages and after specific events or changes in circumstances. That is why it is important to rephrase this question for different cases and try to give more specific answer for each case and this is done below.
What Age Does Car Insurance Go Down?
Age is probably the most important factor at the beginning. Between 16 and 25 you can see substantial drop in rates every year. Then, it settles like a sea after a storm. You may see slightly cheaper premiums in 40s and 50s but they start going up again when you turn 70. After 25, other factors become more influential.
We have looked at a few studies that demonstrate how age affects and came up with the below conclusion partly based on this study. On the below table, we took the estimated quotes at the age of 25 as 100% and showed you how the other ages differentiate in relation to the rates at 25. For example, an average driver pays 250% (2.5 times) at the age of 16 in comparison to what they would pay when they turn 25.
As mentioned above, they mature at 25 and therefore we can use the average cost of vehicle insurance in the US as benchmark in connection with the table below. For example, average expenditure per vehicle for the United States is $841. This figure tells us how much is the median premium and doesn’t tell the type of coverage. However, it is a good enough indication for anyone who is looking for a decent level of liability coverage and a bit more. So, we can say that a typical 16 year old should be able to find an agreeable policy for the price of $2,102 (= 2.5 x $841). However, this may be for a basic one.
We can also estimate roughly how much the same driver would pay for a full coverage since we know that the average cost in the US is $1,325. Then, a regular 16 year old motorist should pay $3,312 (= 2.5 x $1,325) for it. You can use these rough calculation for either a basic or full coverage for yourself as we did. You can work out all sorts of results by following the link above and apply it to the relevant age and gender on the table below.
Table: Average Car Insurance Rates by Age 16 to 26, in comparison to rates at 25 (100%)
It is worth stressing that these are estimated figures and you may pay a lot more or less for your own policy depending on many factors. Two of the key factors are which state you live in and how competitive carriers are. If you can manage to find the cheapest vehicle insurance company in there you can probably reduce premium several times over without any exaggeration, in comparison to the most expensive one. It is fair to say that how much you pay largely depends on how well you compare quotes.
Another key determining factor is the experience. If we look at the table above we see that rates are at its highest at 16. It is almost impossible to talk about experience at 16. But 17, 18, and 19 year olds would have some. That is why it isn’t possible to give a definitive answer to what age and how much does car insurance come down. It partly depends on experience. For example, an 18 year old new driver would probably pay higher premium than a 17 with 1 year no claim.
They are the highest because of the fact that they are the least experienced and most dangerous. This is naturally due to lack of maturity. As you get older you gain some experience and maturity that help substantially. It gradually descends with age and experience. All being equal, a 19 year old would get about 35% cheaper quote in comparison to a 16. However, it may be as much as 60% cheaper if the former had 3 years clean claim record. Clearly, lack of experience scares the carriers and some are more scared than others.
What Age Does Auto Insurance Rates Drop for Males?
If we look at the above table, it is clear that young male drivers are the highest risk group. A male at 16 pays about 15% higher on average in comparison with a female. This is partly because of the more scary accident figures among male teen and the fact that they are known to take more risks on the roads than any other group. This gap between male and female drivers continue until they turn 25. At this stage, the gap is closed and there is a very little difference between male and female rates in favor of ladies.
When Does Vehicle Insurance Start Falling for Females?
Teen female drivers aren’t penalized as bad as males but they are still made to pay for it and history. Underwriters are known to view female motorists as lower risk than males and they offer better prices for ladies. This difference is at its clearest in teenagers and slowly closes later. Most of the time, women can get cheaper quotes than men.
Does Auto Insurance Premium Fall when You Turn 25?
According to the above table, it is clear that turning 25 is a major milestone. Of course, it is not one sharp drop and rates keep coming down gradually pass teen and early twenties. However, it can be said that auto insurance rate maturity is reached at the age of 25. On the table, you can see large drops each year all the way from 16 to 25. But you only see 2% drop from 25 to 26. Looking at restrictions and conditions placed on some policies we can see that underwriters emphasize 25 as the turning point. For example, you may be able to cover certain sports cars only after you turn 25.
What Happens after a Traffic Accident?
They have the affect of wiping good driver discounts away and therefore increasing next renewal quote. See how much does insurance go up after an accident? The good news is that it will start declining just a year after the claim, as long as you avoid another accident or a major traffic ticket in the meantime. You will usually see further discounts for each term passing without a claim. Rates should go back to normal after the 3rd anniversary of the accident. Most carriers only look at the last 3 years history. However, some may check as far as 5 and you may need to avoid them.
When Does Automobile Insurance Come Down? – 10 Other Factors
Age is the most prominent factor in premium calculations at the start. Teen drivers can see large reductions every year, as long as they don’t have any claim or traffic ticket. However, its effects largely disappear at 25, as demonstrated on the table above. Then you need to start looking at other factors that help you save money. Below, we discuss 10 factors that have varying levels of premium reducing effects.
- Shopping Around
Shopping for the best quotes is the most affective and easiest method of reducing costs. If you don’t compare they, you may end up paying 3 years worth of premium to one of the most expensive company, in comparison to the cheapest. You always have a chance of cutting the costs if you shop around, no matter what type of motorist you are.
And the easiest way of shopping is getting instant quotes online and comparing them. A comparison website can help you pinpoint the cheapest in no time.
- Buying a New Car
You will see how much you can save when you switch from an expensive to insure automobile to a cheaper one. There could be a few reasons why a particular model isn’t popular. You can quickly check its rating or you can even get quotes before buying a car to avoid surprised after.
You don’t have to switch from a sports car to a minivan to save money. Even switching from a sporty Audi to a sensible Toyota can be enough to bring the cost down by 20 – 30%. But it could fall by half if you sell a sports car and buy a minivan.
- After Getting Married
Companies love married people because it is statistically proven that married people get involved in fewer accidents than singles. They make sure they wear seatbelt and follow traffic rules. Usually, couples watch and correct mistakes of each other. Also, they don’t take risks because they feel responsible for their partners and family. You may be able to claim around 10% discount just after getting married.
- Buying Home
If you are now a homeowner you should be able to ask for a little bit more discount. They are considered to be more stable than renters and therefore get better prices. You should be able to economize around 5 – 10% regardless of bundling home and auto policies. However, bundling would give you more relief.
- Moving out of City
One big move would be moving out of a large city and into a small town. Even moving from a downtown to a suburb will save you large sums of money. Depending on the city and new zip code you can save 20 – 40%
- Moving out of State
Every state has own laws, accident statistics and other demographics that affect average premiums. Many good drivers pay considerably more because of higher than average rates in their state or city. For example, a good motorist in New Jersey may pay more than a bad one in New Hampshire because of the high rates in NJ.
- Removing Teens off Your Policy
Adding a teen to a policy can potentially increase its price by 30 – 50%. Removing would have the opposite affect obviously. If a child left home you can remove him/her from it. It may even be possible to remove a child who is living in a college campus more than 100 miles away from home. Talk to an agent and find out if it is possible to remove a youngster off. Some providers may be happy to remove them from their parent’s policy, even though they live in the same house, if the youngster has his own car and coverage.
- Improving Credit Score
They may pick up improved credit score and it may be why you see an improved renewal terms. If you can improve credit score you may be able to see better quotes coming in. You can save as much as 20% when you improve credit score from bad to good. The opposite would be true if score deteriorates. Then, you should try to find the best vehicle insurance for bad credit.
When you retire you don’t need to commute anymore and therefore you can save by switching to pleasure use from pleasure and commute. Naturally, mileage would drop when you are retired and that is why premium should go down.
- Change of Job
Changing job can result in low mileage for many reasons. For example, you may start using public transport for daily commute. Or new workplace is nearer home and you can walk or cycle. Anything that result in cutting mileage considerably should be positive.
Most changes in circumstances have the potential to reduce policy expenditure. Some may reduce it a lot and some may only affect it slightly. Also, the opposite is true and they can push it up too.