If you are working with a car insurance agent, you may be told that age is a factor when determining coverage and costs. Insurance tends to cost more at certain age ranges than others. While it may seem unfair, insurance companies have good reasons for using age as one of the many criteria in determining rates and risks. Here is more to know about how insurance companies set their rates and how age affects how much you pay.

How Do Car Insurance Companies Determine Rates?

Car insurance companies determine rates by taking into account your demographics and driving history. Most car insurance companies set their rates based on assumed risk. You could be the best driver in the world, but they don't see that when they determine your rates. Therefore, they must go on statistics based on what they do know about you. Examples of other influences on rates include:

  • Marital status
  • Type of car
  • Gender
  • Geographic location

Why Is Age an Important Influence on Car Insurance Rates?

To minimize risks, insurance companies look at accident and claim data. In general, accidents tend to be higher when the driver is young and inexperienced. However, young drivers aren't the only ones with higher rates. As people get into their senior years, their rates also may go up. However, they usually don't go up as high as a teen or new driver rate.

For most people, rates begin to decline in their mid-20s, though this isn't always a hard and fast rule. If you start driving in your 20s, your rates may be higher until you have a certain number of years of driving experience. Your rate may also not decrease if you have any tickets or insurance claims.

What Can One Do to Get Better Rates?

Fortunately, you and your car insurance agent can find ways to reduce your insurance costs. You may be able to reduce your rates by doing some of the following things.

Staying on Your Parent's Insurance

If you are a young driver, you may qualify to stay on their insurance and pay a lower rate.

Getting Special Discounts

Some companies offer good student discounts, for example.

Buying a Less-Expensive Car

While buying a new, sporty-looking car might be fun, your insurance rates could be unaffordable. Try to find a car that is easier to insure.

Choosing a Higher Deductible

If you must have comprehensive and collision insurance, try to choose one with a higher deductible, if possible. Some auto loan lien-holders may have limits, however.

For more information about car insurance, reach out to a local agent.