How much does car insurance go down when you turn 25?
There’s no hard and fast rule about how much your car insurance will reduce (if at all) when you turn 25. While many people do find that their premiums go down at this age, there’s no guarantee this will happen. How much you’re charged depends on a whole host of other factors besides your age, including your car, your address and driving history, for example.
For instance, if you’ve not made any insurance claims in the past, you’re likely to be offered a cheaper premium after your 25th birthday than someone who has a poor driving record.
Why does car insurance go down when you turn 25?
Some people do experience a drop in the cost of their car insurance rates after they turn 25 years old. Generally speaking, this is because insurers see this milestone as indicative of a reduction in risk. But this mostly applies to those who have never had an accident or claimed on their insurance.
If you’ve been driving since you were 17, by the time you reach 25 you have eight years of experience under your belt, and you may have built a good no-claims history.
As well as this, statistics show that younger drivers (between the age of 17 and 24 years old) are more likely to be injured in a road accident than older drivers. So, once you’re 25 and over, you’ll statistically be less likely to make a claim, which is why you may see a dip in your premium.
What other factors influence how much you pay for car insurance?
As we mentioned above, there are many factors that influence the cost of your car insurance. While age is one of them, it’s by no means the only thing insurers look at.
Here’s a quick breakdown of some of the other factors considered by insurers when determining the cost of your car insurance.
The type of car you have
The type of car you have can affect the cost of your car insurance. Insurers use the Association of British Insurer’s (ABI) Group Rating system to find out the relative risk of insuring certain cars. The higher the risk associated with certain cars, the higher the premium will be.
A car’s rating can range from a scale of one to 50 - one being the cheapest to insure, and 50 being the most expensive. The score is determined by a range of factors including the price of car parts, the car’s performance and security features, for example.
The type of coverage you opt for
There are several types of car insurance to choose from, (such as third-party, third-party fire and theft, comprehensive cover and additional cover). Which one you choose will affect the cost of your car insurance.
The minimum (and cheapest) type you can have in the UK is third-party, which covers costs relating to another person’s car or property if you’re at fault. The most expensive type is comprehensive, which covers you in an array of circumstances (third-party, fire and theft) as well as the cost of repairing your own vehicle.
Bear in mind, that while you should take the cost into account, you should also consider how much cover you need. So cheapest isn’t always best.
Your driving habits
If you’ve made one or more claims on your car insurance, this makes you look like a risky option to insurers, as they base your future driving behaviour based on your driving history.
As such, the cost to insure you is going to be expensive, as this is how the lender mitigates their risk. If, on the other hand, you have a completely clean driving record, then your insurance is probably going to be a lot cheaper, as you appear less risky to insurers. This is why it really pays to drive safely.
Other factors like mileage are considered, too. If you’re someone who does a lot of miles in a year, then the chances of your car breaking down through wear and tear are high, so the cost of your insurance will be too.
Your occupation
The type of job you have also affects the cost of your car insurance, as it serves as an indicator for insurance providers about how likely you are to claim. It may not always seem fair, but if you have a job that suggests you drive very often then your insurance will most likely be higher. This is because you’re on the road more, so you’re more likely to be involved in an accident and make a claim than someone who doesn’t drive as often.
It’s important to always be honest about your job though, as any false information can invalidate your insurance.
Where you live and where your car is kept
There can be a bit of a postcode lottery when it comes to car insurance. If you live on a lovely street but in an area with high crime rates, your insurance is going to be more expensive, as the providers see your car as at a higher risk of theft or vandalism. You are more likely to get a lower premium if your area has low levels of crime and your car is kept in a private garage.
How else can I reduce my car insurance rates?
You may find your premium reduces when you hit 25 years old, but don’t despair if it doesn’t, as there are other ways to lower the cost of your car insurance.
Shop around
As with any purchase, it’s good to have a shop around before committing. You may enter all the same information with the same cover type to one provider and get a much higher quote than from another, as prices differ between providers.
But remember, cheapest isn’t always best, as you also need to consider how much cover you need.
Compare car insurance quotes
It’s worth looking at the details of car insurance quotes, as some may appear more expensive at first glance, but on looking into it, turn out to be better value. For example, one may be an extra £10 a month, but have a much lower excess than another and so it may work out cheaper in the long run if you have to make a claim.
Limit your mileage
As we mentioned earlier, the fewer miles you do, the less chance there is for wear and tear. So limit your mileage where you can, as this will lower your insurance.
Make your car more secure
Insurance is all about evaluating risk, so you can make it cheaper by minimising the risk. If you can make your car more secure, with things like steering wheel locks or clearing out the garage so you can park in there, you’ll see these safety measures reflected in reduced rates.
Increase your voluntary excess
Generally, the lower your excess, the higher your premium may be. This is because your car insurer is going to have to pay a bigger slice of a claim. If you increase your excess, then your annual premium will go down. But you need to make sure you opt for an affordable amount in case you need to make a claim in the future.
Build up your no-claims bonus discount
Perhaps one of the best things you can do to lower your car insurance rates is to build up your no-claims discount. The more years of safe driving and no claims you have under your belt, the less risky you look to insurers, and the lower your premiums.
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Disclaimer: All information and links are correct at the time of publishing.
Adele Kitchen
Personal Finance Writer
Adele is a personal finance writer with more than 10 years in the finance industry behind her. She writes clear and engaging guides on all things loans for Ocean, as well as contributing blogs to help people understand their options when it comes to money.
