How Age Affects Car Insurance Premiums
Car insurance rates vary considerably based on your driving record, ZIP code, vehicle, and many other factors. But many are unaware that your age plays a significant role in how much you must pay for auto coverage.
In a new Clearsurance report, The Car Insurance Age Tax, researchers studied dangerous driving behaviors by generation to see how they affect car insurance premiums.
How Age Affects Car Insurance Rates
According to Clearsurance, car insurance rates are the highest for new drivers, which is Generation Z. The idea is that new drivers have less experience and are more likely to get into an accident.
Car insurance rates typically decrease once a driver reaches age 25 or 26. That’s also the age when the percentage of fatal speeding crashes decreases.
Auto premiums increase again for drivers in their 70s, presumably due to health issues such as vision impairment and mobility issues. Experts call the rate increase for young and older drivers an “age tax” because it has little to do with an individual’s driving skills.
Risky Driving Statistics By Generation
To see if the “age tax” is justified, Clearsurance analyzed data from the National Highway Traffic Safety Administration (NHTSA) on drunk driving, speeding, fatal crashes, non-fatal injuries, seatbelt use, and distracted driving.
They examined population data to calculate which generation had the most car crash deaths relative to the population size. Their findings were not what you’d expect.
Generation Z: Born Between 1997-2012
The data collected for Gen Z was surprisingly good. Clearsurance found that the youngest generation has the second-lowest rate of fatal crashes, drunk driving, and restraint (seatbelt) crashes, coming in behind Baby Boomers. They have the lowest number of distracted driving crashes.
How did the youngest generation have such a good score? According to Clearsurance, the data for Gen Z may be skewed because many aren’t old enough to drive legally.
Clearsurance also notes that many in Gen Z aren’t old enough to drink, which may be why they had such a low score for drunk driving fatalities compared to Millennials and Gen X.
Millennials: Born Between 1981-1996
Clearsurance found that Millennials are the riskiest drivers. They scored the worst for fatal crashes, speeding, drunk driving, distracted driving, and seatbelt use.
The data showed that younger, male Millennials have the highest number of injuries and fatalities compared to their peers. That may be one reason why the generation didn’t fare so well.
Most Risky Generations by Car Crash Type
- Highest Rate of Fatal Crashes and Injuries: Millennials
- Highest Rate of Fatal Speeding Crashes: Millennials
- Highest Rate of Fatal Drunk Driving Crashes: Millennials
- Highest Rate of Fatal Distracted Driving Crashes: Millennials
- Highest Rate of Fatal Lack of Restraint Crashes: Millennials
Generation X: Born Between 1965-1980
Gen X is the second riskiest generation, trailing behind Millennials in almost every risk category except fatal speeding crashes. (Gen Z had slightly more speeding-related crashes.)
Clearsurance reports that Gen X’s problems with speeding, drunk driving, and distracted driving could result in higher insurance rates than Baby Boomers or Gen Z.
Baby Boomers: Born Between 1954-1964
Baby Boomers make up the oldest drivers, and according to Clearsurance, they have the lowest injury and fatality rates in most categories, making them the lowest risk group overall.
In addition to having a lot of driving experience, Clearsurance notes that many Boomers may become less risky after they retire and no longer commute.
Least Risky Generations by Car Crash Type
- Lowest Rate of Fatal Crashes and Injuries: Baby Boomers
- Lowest Rate of Fatal Speeding Crashes: Baby Boomers
- Lowest Rate of Fatal Drunk Driving Crashes: Baby Boomers
- Lowest Rate of Fatal Distracted Driving Crashes: Gen Z
- Lowest Rate of Fatal Lack of Restraint Crashes: Baby Boomers
How to Reduce Your Car Insurance Rates
Despite the age tax, there are ways to reduce your car insurance premium. The first step is to shop around for cheaper quotes online. The second is to maintain a clean driving record.
Car insurance rates increase by 34% on average after an accident, according to the Clearsurance report. In extreme cases, they can increase by as much as 80%. Being a safe driver is key to keeping rates low regardless of age.
Use these tips to be a safe driver and keep your car insurance rates as low as possible:
- Don’t text and drive.
- Don’t drive under the influence of alcohol or drugs.
- Don’t drive when you’re tired.
- Wear your seatbelt at all times.
- Use your turn signals.
- Drive the speed limit.
- Maintain a safe distance from the vehicle in front of you.
- Pay attention to your surroundings.
- Take added precautions in extreme weather conditions.
Read the Clearsurance report to see the complete data: Risky Driving Behaviors & the Car Insurance Age Tax [2021 Findings]