Why Does Car Insurance Cost More for Over 65?

Car insurance is a bit of a cycle – when you first start driving, it costs a fortune. Then you get into your thirties, forties and fifties and the costs slowly settle. However when you hit your mid-sixties, the costs start to creep up again and if you are lucky enough to drive into your seventies or even eighties, you are almost back to the beginning. But why does car insurance cost more for the over 65? Why Does Car Insurance Cost More for Over 65?
Climbing Costs
There are hundreds of examples across the Internet of disgusted older drivers who have seen their premiums double, triple and more just because they have passed a certain age barrier. One man saw his premium for his Vauxhall Corsa go from £389 to £883 when he passed from 67 to 68 without any claims or other changes in details and he was with a company offering ‘special’ policies for older drivers.
Actress Sheila Hancock made headlines last year when she raised the issue of age discrimination in car insurance after seeing an increase on her insurance premium of £1,400 from one year to another as she reached the age of 82. She had driven for six decades without any claims and saw her cover rise from £873 to £2,246.
The Ageing Population
Some are in the same position as Ms Hancock and believe it is another example of ageism, illegal in other industries. As the number of drivers over the age of 65 increases due to the ageing population, insurance companies seem to be making more and more money from each case.
A study by the Association of British Insurers in July 2015 saw that premiums for the 66-70 age group had increased to an average of £241. This increases to £255 for 71-75 year olds and £291 for 76 to 80 year olds. After 81, the average reaches £352 but this is still lower than the average premium for a 30 year old, at £502. Part of this is the belief that older drivers will be on the road less than a 30 year old, who is likely to be driving to and from work as well as other family events.
Costs Of A Claim
One of the factors that is used to rate a particular age group for insurance purposes is the average cost of a claim. And the figures show that as we get older, the claims we have cost more and are more in line with costs seen by teenagers in accidents.
The ABI figures for last year showed that the policyholder between 18-20 had an average claim costs of £3,667, dropping to £2,905 when they were 21-25. This figure continues to drop until the 61-65 age group is reached, at which point it starts to increase again. The 81-85 group had an average claim cost of £2886 while the 91+ group were up to £3,656, nearly the same as the newest drivers.
Conclusion
While paying more for your insurance as you get older may seem harsh, there is clear evidence to show why insurers rate older drivers higher than those in the middle years. While this is harsh for the majority of drivers, it is unfortunately the best system currently available.
Lesa Judge is the Marketing Manager for BMG Insurance, specialists in car insurance for over 65s.