How Much Can Age Affect Auto Insurance Prices? OAI Runs the Numbers

    RANCHO CUCAMONGA, CA, April 06, 2011 /24-7PressRelease/ -- The jury may be out on whether age brings wisdom, but a new premium-rate analysis from OnlineAutoInsurance.com shows that growing older is likely to at least bring better California car insurance prices.

The site recently calculated premiums for nine driver profiles across four California insurers. All of the profiles were unmarried females of different ages who live in Los Angeles. OAI compared the prices for the same policy when the driver was 16, 17, 18, 19, 25, 35, 45, 55 and 65 years old. The results showed that:

- The average cost of coverage for a 16-year-old was about 184 percent higher than the average for a 65-year-old.
- Average prices made their first big drop between the ages of 18 and 19, when they went from $4,888 to $3,500 -- a 28 percent decrease.
- Average premiums declined from 16 until the driver was somewhere between 35 and 45 years old, when they began to rise slowly.

To anyone who has had to purchase coverage for a teenager, these results are likely not a surprise. Teens are regularly regarded as a high risk car insurance group because of their higher-than-average accident rates. According to the Centers for Disease Control and Prevention, "Per mile driven, teen drivers ages 16 to 19 are four times more likely than older drivers to crash."

But then why such a big price-break for 19-year-olds? In the 1980s, California voters approved Proposition 103, which dictated the types of factors insurers in the state could take into account when setting rates. Since its passage, auto insurance providers in the state have been required to give a policyholder's years of driving experience the third-largest weight out of all eligible factors.

Source: http://www.insurance.ca.gov/0500-about-us/0500-organization/0400-rate-regulation/prop-103.cfm

In addition, it instituted a mandatory good-driver discount that ensured motorists who have been driving for three years without any major violations or accidents get a 20 percent discount on rates. Since all of the driver profiles had no accidents, this could at least partially account for the drop, since it is only at the 19-year mark that the driver would have had 3 years behind the wheel and that the discount would kick in.

To learn more about this and other car insurance issues, readers can go to http://www.onlineautoinsurance.com/learn/high-risk-drivers.htm where visitors will find informative resource pages as well as a quote-comparison generator that can help consumers jump-start the search for the best price for coverage.

Note on methodology: Rates were calculated for liability, comprehensive and collision coverage with $500 deductibles for a 2009 Toyota Corolla LE. All driver profiles were unmarried females who live in the 90010 ZIP code, have no accidents or violations on record and drive about 12,000 miles a year.

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