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Car insurance – do older drivers pay over the odds?

Premiums for some age groups appear to be disproportionate

Speed dial showing increase in car insurance premiums

Some older age groups appear to be paying substantially over the odds for car insurance compared to the cost of their claims, according to new Which? research.

Among the age groups we examined, those aged 66 to 70 were worst hit, paying about 75% more in premiums than their insurer pays out in claims per policy for that age group. 

By comparison, the level for 31 to 35-year-olds is 47%.

Find out more: How to get cheap car insurance – our experts present a series of tricks and tips

Car insurance for older drivers: our analysis

We compared average premiums paid with average claims per policy for 14 different age groups, using data from the Association of British Insurers (ABI), covering drivers aged 18 up to 85 in 2012 (the most recent data available).

On average, for drivers aged 51 to 85, there’s a bigger difference between the premium they pay and their average claims cost per policy than for those aged between 18 and 50.

Those aged 66 to 70 paid an average premium of £279, which is 76.6% more than the average cost of a claim per policy for their age group (£158). For 81 to 85-year-olds, the average premium (£392) was 67.5% more than their average cost of a claim per policy (£234).

In contrast, those aged 21 to 25 paid an average premium of £964, just 42.4% more than their average claims cost per policy (£677). Similarly, 31 to 35-year-olds faced an average premium of £547, which is just 47% more than their average claims cost (£372).

Car insurance: the best deals for older drivers

We analysed premium quotes given directly online by 43 of the biggest insurers, working with market research firm Consumer Intelligence.

For 61-65 year olds, Sheila’s Wheels was cheapest on average (£276), although it didn’t always offer quotes for profiles in this age group. Co-operative Insurance was cheapest for 66 to 70-year-olds (£299). 

Esure was cheapest for those aged 71+ (£331), although it offered quotes for fewer than half of our profiles. Swiftcover quoted more widely, with an average premium of £363.

Find out more: Over-50s car insurance – more tips to help older drivers get a better deal 

Car insurance: other ways to save

There are several ways to lower your premiums. The car you drive is a major factor – downsizing to a smaller, cheaper model can help. 

When shopping around, calling insurers and haggling can pay dividends. In a 2014 Which? study, members saved themselves an average of £42 by haggling on their car insurance. It’s also worth calling if you can’t get a quote online. 

If you’re a safer driver, it’s worth considering a ‘telematics’ policy, which entails a ‘black box’ that is fitted to your car to monitor your driving and calculate your premiums. 

Find out more: Black box car insurance – the lowdown on ‘telematics’

Our findings: the industry responds

We challenged the ABI with our findings and it said that age isn’t the only factor determining a person’s premium, adding that insurers also take into account claims history, address, driving experience and vehicle type.

However, we don’t think this adequately explains why some of the groups we’ve identified seem to be paying disproportionate premiums.

Find out more: Car insurance reviews – our customer satisfaction ratings

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