Car Insurance Options for the Over-50s
A car crash on Jagtvej in Copenhagen, Denmark. (Photo credit: Wikipedia)
Car insurance providers, like pension providers, take account of age and life expectancy when pricing their products. Age is also a key factor in providing disability and other medical insurance. The risks of accidents and illness do increase with the age of the insured.
Risk factors
However, there is a whole spectrum of risk factors for car insurance providers that are related to age. Statistics show that on average young drivers, those aged 25 or younger, are more likely to have accidents and to file claims. This is due both to inexperience in driving as well as the youthful dream of feeling immortal. Initially, these risks tend to fall with age.
Risk changes
When a person reaches 40 he is probably the safest risk for any car insurance provider. This is a combination of driving experience and caution, whether in driving around friends and family, holding on to a job or not drinking alcohol when driving. Even a 35-year old new driver with no experience at all is less likely to have an accident than an 18-year old that may have been driving vehicles on private land since the age of nine. However, by the time someone reaches the age of 70 the risk factors start to rise again.
Fortuitous events
Insurance is a series of products designed to meet the financial consequences of fortuitous events. This means that once an event is predictable, companies will decline cover, with the obvious exception of life insurance. The most frequently cited example of this type of thinking is that no–one will rush to sell insurance for a burning house. You may click here for more information about car insurance.
Consequences
There have been suggestions that age be eliminated as a risk factor for car insurance. But the consequences of this policy are that a high risk client for one company may become a business opportunity for another. Some people may avoid buying any car insurance at all. If national regulators remove the consideration of age as a risk factor, the consequences could be bizarre. As one European study commented, young drivers today pay significantly high motor insurance premiums than older drivers, though this is just up to the age of 70 when the premiums rise again. This reflects the claims profile recording by insurance companies. If the age risk factor is removed, high risk young drivers will pay lower insurance premiums for powerful motors than a low risk older driver in a standard family car. The implications for road safety are obvious.
Signposting
It means that despite statistics, which may in any case offer a series of different interpretations, insurance companies have to find some flexibility in setting premium levels and policy conditions. The UK’s 2010 Equality Act gave insurers an exemption when it comes to rating insurance risks according to age. However, they have to produce evidence that justifies their pricing. Insurers will help consumers to find affordable cover through a process called “signposting.”
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Category: Car Insurance
