Are Older Cars More Expensive to Insure?

When you’re buying a car it’s wise to consider the cost of the insurance premiums in your running costs. And a lot of factors go into deciding that premium. So are older cars more expensive to insure than newer cars? Well, yes and no.

Clear as mud, right? No worries; here’s what we mean by “yes and no.”

How are car insurance premiums calculated?

To understand how car age affects insurance premiums, you need to have a basic understanding of how premiums are calculated.

Basically, when you get a car insurance quote, the insurance company giving you that quote assesses how much of a risk you pose to its bank balance (put simply). That is, it looks at what the chances are of them needing to pay a claim from you, and how large the claim(s) might be.

It calculates this risk according to the information you’ve provided throughout the quote process about you, your car and the other drivers of your car.

The higher your risk as a policyholder, the higher your premium. That’s one of the main reasons car insurance for young drivers is more expensive. Younger drivers are statistically more likely to be involved in accidents, and younger males even more so.

There are lots of factors that can contribute to assessing whether you’re a high risk or low risk customer. These include:

• your driving history,
• your claims history,
• where you live and garage your car,
• how much driving you do and when, and
• the age, type and safety rating of the car you drive.

Each insurance provider has its own insurance underwriter (the underwriter accepts liability for paying the insurance provider’s claims). And each underwriter has its own underwriting process, including different ways of calculating risk. This is why you could get cheaper premiums at one company while a friend gets a better deal elsewhere.

So, if the car you drive contributes to your risk profile, are older cars more expensive to insure? Or are they considered lower risk? It’s complicated.

Are older cars more expensive to insure? Or cheaper?

Asking “are older cars more expensive to insure?” sounds simple but in reality it’s a bit like asking “how long is a piece of string?”

We know, it’s not the straightforward answer you wanted! But that’s because it’s a complex topic. Here’s why.

Factors that affect whether older cars are expensive to insure

Because insurance premiums are based on risk, age of the car does play a factor. It’s true that cars which are a few years old are less valuable than brand new cars.

So in theory, you would receive a better car insurance premium for a 2018 model Kia Picanto than the exact same car in a 2021 model because its value (and therefore the cost to replace it) has depreciated. If all other variables remained the same, that is. But nobody would really consider a 2018 car old. Especially as cars are being built to last for a decade easily nowadays.

Breakdowns, parts scarcity, safety rating and more

What about when it gets to cars which are 10, 15, or 20 years old? Obviously, when calculating risk here there are factors at play including mileage, service history, and more. A very high mileage car would probably receive a different premium to a very low mileage car with perfect service history, even if they were the same age.

But the truth of it is that much older cars are more likely to have mechanical failures or problems. So they’re more likely to break down and leave you stranded. And when they do, it can be expensive to source and replace parts.

Having said that, a number of newer cars can also be expensive to repair due to the high-tech nature of their parts and/or the availability of these. Yes, we know. There are so many variables…

And on the flipside, innovations in safety and technology mean that modern cars are lower risk to drive on the roads. So if your car is considered high-risk due to its age, it’s likely you’ll pay a higher car insurance premium. Even if your car isn’t worth a whole lot.

Of course, the increase on the premium might only be marginal. It’s impossible to give accurate estimates without getting a quote – so if you’re deciding between two cars, you might want to get indicative insurance premium quotes on both before you commit.

And if you do opt for the older one, here’s some tips for making your high mileage car last longer. Just in case.

Saving expenses on insuring an old car…or a new one

Regardless of what car you drive, having a great car insurance provider is your first step to making savings. Not to mention the hassle you’re saved when you do need to claim. Look for a provider that helps you to tailor your product to your individual requirements, with a range of plans you can add features on to if needed. You don’t want to pay for all the bells and whistles if you don’t need them, right?

if you’re looking for other ways to save on car insurance, read our article on how to lower your car insurance premiums and check out PD Insurance’s car insurance offering.