Relative Risks of Age and Auto Insurance

In many ways, auto insurance reflects the risk factors of aging as clearly as any kind of insurance. Regardless of age, auto insurance remains controversial because it’s influenced by behavioral and demographic realities that some people would rather avoid.

But avoiding reality is silly. And it can be expensive. There are a number of tools available to people over 50 that can help reduce or at least manage the price of auto insurance. If you use these tools and drive carefully, you should have no problem driving safely and cheaply for years to come.

The first thing to understand about auto coverage is how the insurance companies look at the risks that older drivers pose.

For most men and women, auto premiums actually drop a bit while they’re in their 50s. The rate of accidents per mile driven is lower for people in the 40s and 50s than any other group. Insurance companies know this and respond accordingly. One example: State Farm says it reduces motorists’ rates by ten percent when they reach age 50.

Since older people tend to drive less and to avoid the most dangerous conditions (at night, during rush hour and in bad weather) fewer older people than teenagers die on the roads. That translates into lower insurance rates for older drivers than for even middle-aged drivers.

Consider these California Highway Patrol figures for 1989:

Accident rates and premiums begin creeping up again when drivers reach 60; over age 75, the rate of fatal crashes per mile driven is even higher than it is for teenagers. ”[People over 50] are high-risk drivers when they drive,” says Allan Williams, who studies age and auto fatality at the Insurance Institute for Highway Safety. But their accident rates are lower mostly because they drive fewer miles and drive less frequently than other drivers.

A National Highway Traffic Safety Administration report found the nationwide “crash involvement” rate for the 16to-19 age group is 28.6 accidents per million vehicle miles traveled. The rates drop markedly for the middle-age brackets; then they rise again in the senior range, reaching 6.4 for the 70-to-74 age group and 7.7 for the 75-to-79. Among the oldest drivers, the crash rates reach their highest levels15.1 for the 80-to-84 group and 38.8 at ages 85 and older.

The AARP, which offers a driver safety training course for people over 50, stresses that the entire group its target market has more accidents per mile driven than any other age group. But some insurance industry professionals argue this is merely an attempt to spread risk.