The insurance business is all about rating risk. As you get older, your premiums for medical and life insurance will most likely increase. That’s because as most people age, they need more medical care, and from an actuarial perspective, lifespan shortens. The auto insurance industry is somewhat different, though. They actually like to cover drivers in an older demographic.
Why? Less overall risk.
In the first place, senior drivers generally have a lot more driving experience. During their lifetimes, they’ve likely driven frequently in bad weather conditions, and have learned, practical knowledge when it comes to dealing with weather related hazards such as slippery or icy roads.
Experience with hazardous driving conditions is just one reason why auto insurers generally give senior drivers a break on insurance premiums. As you age, you’re also more inclined to drive safer, perhaps because we all become more aware of our own mortality when we get older. Senior drivers anticipate conditions in advance, and tend to drive more defensively than the young, aggressive stock broker racing the BMW to get to work on time. And finally, senior drivers tend to be less distracted behind the wheel, in terms of sound system or cell phone use.
The bottom line: senior drivers get into fewer accidents. A lower accident rate in an age cohort means less risk and lower premiums for everyone in that cohort.
There is a point, though, where an insurance company will likely start to raise rates on a senior driver. The 70 year mark seems to be where most auto insurance companies will increase rates because of age. The reasons are mostly medical in nature: eyesight isn’t as good, reaction times (braking, steering) are slower, and senior drivers become almost too defensive in their driving habits.
So, as you get older, you’ll most likely see your auto insurance rates drop as you progress through middle age. There are other ways, too, that your lifestyle and affiliations can have a positive impact on your policy premiums.
Let’s say that you’re a member of the American Association of Retired People (AARP) – and yes, you can join at 50. Almost every insurance company offers affinity discounts to AARP members. Don’t overlook defensive driving courses targeted toward senior drivers. Insurance companies give discounts for completion of senior driver courses, just like teen discounts for drivers ed.
After retirement, it’s almost a sure bet that senior drivers spend less time behind the wheel than when they were working. Less miles driven per year equals less risk to the insurance company equals lower premiums for you. So, after that last day on the job, don’t hesitate to contact your agent, and let them know that all of the miles that you rack up on the car will be for pleasure!