The way that car insurers view the age of policyholders has come under the spotlight recently, with the story of actress Sheila Hancock’s rocketing car insurance premium.

Hancock, 82, saw her annual premium with Admiral Insurance jump from £873 to £2,246, despite not making a claim. It took little time for campaigners to call for ageism in insurance to be made illegal.

But was it really just down to her age? How much of a factor does age actually play in determining your car insurance costs?

Bigger claims, bigger premiums

The Association of British Insurers has published data which it argues shows why age is an important factor in working out car insurance premiums. The table below breaks down the average premium paid across various age ranges, and the average claim that insurers receive from drivers of those ages.

Policyholder’s age

Average premium

Average claim

18-20

£972

£3,667

21-25

£649

£2,905

26-30

£502

£2,520

31-35

£426

£2,274

36-40

£378

£2,279

41-45

£343

£2,199

46-50

£326

£2,265

51-55

£306

£2,233

56-60

£277

£2,216

61-65

£252

£2,180

66-70

£241

£2,225

71-75

£255

£2,495

76-80

£291

£2,572

81-85

£352

£2,886

86-90

£415

£3,690

91+

£478

£3,656

So younger drivers pay the highest premiums, because their claims are likely to be very expensive. They also claim more frequently than other age bands.

Those aged 61-65 have the lowest average claim, but have higher premiums than drivers in their late 60s because they tend to make more claims.

Rob Cummings, manager for general insurance at the Association of British Insurers, said that the data shows a “clear link” between the age of the driver and the risk of making an expensive claim on their policy.

He added: “Older and younger drivers will pay more for their car insurance than those in their middle age because they are more likely to have accidents and make expensive claims for personal injuries.”

[Related story: Younger drivers' insurance premiums fall, while over-50s rise]

Telematics

While older and younger drivers pay the biggest premiums, the two groups are seeing their premiums move in different directions.

According to Consumer Intelligence’s latest Motor Insurance Index, premiums for drivers aged 50 and over have increased by 5.2% since May 2014, while motorists aged 25 have seen a fall of more than 10%.

Ian Hughes, chief executive of Consumer Intelligence, said that the price falls for young drivers appeared to be “at the expense of older motorists”.

Part of the reason young drivers have seen such big premium falls has been that they are adopting telematics policies. These see a black box fitted to your car, which then monitors your driving.

Should it establish that you are a safe and careful driver, your policy will get cheaper.

More than one in five (22%) young male drivers have a telematics insurance policy, while 14% of young female drivers have them. In total around 323,000 telematics policies are currently held, up by 9% in the last 18 months.

Older drivers aren’t such big fans though. Of drivers aged 55-64, only 4% of male drivers and 1% of female drivers have telematics policies. That drops even further for the over 65s, with 1% of male drivers and virtually no female drivers.

Consumer Intelligence’s research found that older drivers would be more likely to take up such policies if they included alerts on breakdown car and servicing, as well as owning the data about their driving themselves rather than the insurer owning it.

[Related story: Is over-50s car insurance a waste of money?]

What else do insurers consider?

According to Admiral, the reason for Hancock’s massive premium increase isn’t her age, but rather the fact that she had been involved in two accidents in the past two years, even though neither were her fault.

Insurers have said that being in a ‘no fault’ accident actually suggests you are more likely to cause another accident in the future.

There are plenty of other things insurers will look at too.

Your job

Certain jobs carry a greater risk of claims.

The car

The more expensive the model, the more it would cost to replace if stolen or written off, hence the higher premiums.

More powerful cars are also more likely to be in accidents, while particularly desirable cars may be considered at greater risk of theft.

Where you live

If you live in an area where there is a greater risk of accidents, you’ll pay more for your insurance. The same is true if you live in an area with high levels of crime.

Your driving record

What is your driving history like? Have you ever been in a crash?

Do you have points on your licence?

These will all play a part in determining the cost of your insurance. Age is absolutely a factor, but as with the case of Sheila Hancock, it is unlikely to be the sole reason for a sharp premium increase.

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