Anyone who is (or was) under age 25, and paying for their own auto insurance, looks forward to attaining an age when their rates go down. In most states, your rates are very high on your own auto insurance policy, until you have three years experience as a licensed driver. This means if you were licensed on your 16th birthday, you should look forward to your 19th birthday, and that would be an excellent time to shop for much lower rates. Even for drivers with clean driving records, auto insurance can be very expensive until you are age 25 or 30. But this blog post is not just for younger people, because your age is an auto insurance rating factor throughout your life, and has big price implications whether you are 16, 30, 50, or 70 years old. I’ll give you simple tips, no matter what your age, on how & when to shop, so you can use your age to your advantage, to get lower auto insurance rates.
The traditional price breaks on car insurance occur once a driver is age 21, and again at age 25. Even states like California, that do not allow auto insurance policy rating based on age, use the number of years of driving experience, with lower rates after 3, 5, & 9 years, which corresponds to ages 19, 21, & 25, if you were licensed on your 16th birthday (if you were not licensed on your birthday, you get lower rates on the third, fifth, and Ninth anniversary of the day you were first licensed). Normally, you see the lower rate for being a year older at your next policy renewal date after your birthday. So, if you turned 25 on December 15th, but your car insurance does not renew until June 12th, you will pay the under-age-25 rate for almost 6 months after you’re age 25.
However, some auto insurance companies allow you to have your premium adjusted mid-term, effective as of your birthday, so you don’t have to pay the higher rate until your renewal date, though you usually have to request it. Other insurance companies make you wait until your renewal date, and some companies go to the extent of not allowing you to get the lower rate by adjusting your renewal date, or starting a new policy.
Auto insurance company rating methods have become more sophisticated in recent years, where some companies give you a lower rate for being a year older each year until you are age 30, with your marital status continuing to affect your rates beyond 30 years old (As far as rates are concerned, it’s better to be married than single). Many companies have moved away from the old method of rating all people, married age 25 or older, and single age 30 or older, at the same rate, as an “adult” rating. If you want to save money on your auto insurance, you need to know how & when your age will get you a lower rate. If you are under age 25, you may want to choose a car insurance company allowing you to get the lower rate for your age mid-term, if you need it.
Here’s a few tips to use the age rating factor to your advantage:
Tip #1. Know your renewal dates in relationship to your birthday.
Do you know when your auto insurance policy renews? Most companies sell six month policies. If your birthday is in December, and your auto insurance policy renews in May & November, you have to wait 5 months to get any lower rating for your age. It can be worse if you have an annual policy. If your birthday is in the month after your annual renewal date, you may have to wait 11 months to be rated for your age. If your birthday is shortly after your renewal date, you may want to see if your insurance company will adjust your renewal date. This is not only important for drivers under 30, since age may be a factor after age 30. Many insurance companies discount rates for drivers 50 and older, so making sure you are taking full advantage of your age is important for all drivers.
Tip #2. Use your birthday as a reminder to do your annual auto insurance shopping.
No one wants to spend his or her birthday talking to insurance companies, but put a date on your calendar, within 30 days after your birthday, to do your annual insurance shopping. If you really want to save lots of money, keep your coverage up to date based on your current needs, and make sure you don’t overpay for your insurance, you need to shop your coverage with other companies annually, including a review of your coverage, rates, & discounts from the company you insure with now.
Your life is always changing, sometimes in ways affecting your insurance rates, although you may not realize it. People move, marry, divorce, have kids, change jobs, buy & sell homes, cars, and personal property. Accidents, claims, & tickets occur, or fall into the past as time goes by. These changes, and many other factors, may have a major impact on your insurance rates, changing which companies have competitive rates for you. Also, insurance companies are always changing their rates, or offering new discounts, rating plans, & coverage options. By updating your information with your company, and shopping your coverage with other insurance companies once a year, you make sure you don’t miss a change in your situation, which can get you a much lower rate. By shopping shortly after your birthday, if you decide to change insurance companies, you make sure you are not missing out on a lower rate because of an impending change in your age.
Tip #3. If you are about to turn 70 years old, make sure your auto insurance starts or renews shortly before your birthday.
Many auto insurance companies start to raise rates at age 70, so if your renewal date is shortly before your 70th birthday, you may be able to maintain the age 69 rates close to 6 months (or a year, if you have an annual policy) after you have turned 70.
Tip #4. If you have more than one driver in your household & rated on your policy, do your annual insurance shopping shortly after the birthday of the youngest person in your household.
For example, if you are 25 years old and your wife is about to be age 21, shop shortly after her 21st birthday. If you are 30, and your husband is 24, shop shortly after your husband’s birthday. If you and your spouse have an 18 year old child, shop shortly after your child’ birthday. Keep in mind, these are tips to make the most out of the age rating factor, and there are other rating factors sometimes having a bigger impact on the price of your auto insurance, so don’t think you HAVE to wait to shop, if there are other reasons why you may get a lower rate, such as an at-fault accident dropping off your three year driving record.
Tip #5. What if you have more than one young driver in your household?
If you have more than one teen driver, and their birthdays can’t be timed to a renewal date, seek out an auto insurance company offering mid-term policy adjustments to lower their rate on their birthday. Shop for the auto insurance company with the best rates and most beneficial rating rules. Some auto insurance companies have rules more favorable to customers with young drivers, such as more flexibility with occasional rating, or if they have their own auto insurance. However, remember your goal is to get a low rate, so you don’t want to choose a company with rating plans beneficial to young drivers, if the company’s rates are not competitive. It’s better to pay the age 16 rate for your 17 year old, until the next renewal date, if the rate is lower than a company able to adjust the rate on their birthday.
Tip #6. If a young driver (under age 25) in your household has a birthday coming up before your auto insurance policy renewal, contact your company to see if you can get your rate adjusted.
Some auto insurance companies offering mid-term adjustments for age do not do it automatically, though if you have a really good agent, they may have taken care of it for you. Call your agent or company to make sure you are getting the best rate possible.
Massachusetts recently fined Safety Insurance for not adjusting their customers rates for mid-term class changes, as specified here, in this excerpt from the linked article: “Under Safety’s private passenger auto insurance rating manual, the company was required to adjust policyholder premiums as certain drivers gained additional years of experience. However, the attorney general’s office alleged that Safety failed to make many of these adjustments, called “mid-term class changes,” resulting in overcharges to hundreds of policyholders. Most of the allegedly affected drivers were in their teens or early twenties.”
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