Average car insurance premiums have risen for the nation’s older cohort.

There are a sizeable number of different factors used when insurers set their prices for motor insurance, including information regarding the vehicle, its age and condition, where it is kept and details of the people who drive it. For the latter, age can influence both the likelihood of policyholders making a claim and the cost when they occur.

It follows that while car insurance costs have risen across the board, older motorists are paying ever-increasing premiums, whereas younger drivers are paying proportionately less.

According to the Association of British Insurers (ABI), the average price paid for motor insurance rose by 8% in the fourth quarter of last year. The ABI’s latest Motor Insurance Premium Tracker found that motorists have been hit by a succession of sustained cost pressures.

Energy inflation has added an average of more than £70 to each repair. Average paint and material costs have increased by nearly 16%. Around 40% of all repairs are affected by either parts delays or shortages. Average courtesy car costs to repairers have risen by approximately 30%. And the average price of second-hand cars increased by 19% in the year ending 2022.

The Financial Conduct Authority (FCA) introduced new rules on the pricing of motor and home insurance last year. These ensure that the price paid by existing customers renewing their motor and home insurance is no higher than the price charged to a new customer for an equivalent policy, assuming it is bought through the same distribution channel, such as a broker or price comparison website.

However, FCA rules do not set or cap premiums paid by new or existing customers. The price of cover will continue to reflect a range of factors, including the cost of settling claims and, not least, the drivers’ age.

Unsurprisingly, motorists have been getting older as the population ages. Once drivers reach the age of 70, statistics show that they’re much more likely to have accidents. The risk of this happening accounts for average car insurance premiums gradually rising.

The increase in the number of older drivers on the road is also determined by social factors. For instance, as public transport has suffered from budget cuts, there are fewer buses available, particularly in rural areas.

“Elderly drivers also tend to be less adept when it comes to using price comparison websites which can identify lower prices and reduce their outgoings,” says Ken Carter of personal finance website Moneymapp.com.

Mr Carter says that Moneymapp has simplified the task of finding less expensive motor insurance.

“At any point, website users who, incidentally, do not need to provide details of everything from their mother’s maiden name to their inside leg measurement to use Moneymapp.com, can simply click on the ‘get quote’ button,” he adds.

“There are also ways in which older motorists can counter rising insurance premiums. These can come in handy when we consider that the average price paid to renew an existing motor insurance policy during the fourth quarter of 2022 increased by £31 to £428, a rise of 8%.

“For example, when invited to fill in an insurer’s application form online, it makes greater sense to list your occupation as ‘retired’ or ‘pensioner’ rather than ‘unemployed’ because applicants registered as unemployed tend to be charged higher premiums.

“Adding an adult daughter or son to an insurance policy will also reduce the premium being charged, although this will not apply to additional drivers in their early twenties,” says Mr Carter.

Unfortunately, there’s no getting away from the fact that as supplier and insurance company costs have risen, even older motorists boasting unblemished driving records can expect to see their car insurance costs rise.

Nonetheless, motor insurance is an expense that can be reduced by judicious use of price comparison websites, even if older drivers may decide to enlist the assistance of younger family members!

For more financial advice, check out Peter Sharkey’s regular blog, The Week In Numbers.

This column is for general information only and cannot be relied on as financial advice for individuals. Consult your professional adviser.