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How Does the Age of a Car Affect the Insurance Premiums?

  • Auto Insurance
  • Sara Sam
  • 7 minutes

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Age may be just a number for you and me but not for your car. You might be aware that your age is a major factor in placing you under the risk and non-risk category of drivers. What about your car’s age? Does it have an impact on your profile? How does the age of a car affect the insurance rates?


The effect the car’s age has on the insurance rates is relative. Sometimes an older one can save you a few bucks on insurance, while other times it is a newer model that does the savings better. Let us find out how the age of a car influence insurance rates.

How does your car affect the insurance premiums?

Insurance provides protection against the probable financial liabilities that can arise during the course of driving your car. In addition to the different driving and non-driving factors regulating the insurance, your car can specifically determine the cost of car insurance.

  • Make and Model of the Car

The insurer prices the policy with respect to the car model. The insured declared value is calculated based on this.

  • Manufacturing Year

This determines the age of the car. However, based on the model this can be used to calculate the depreciating and appreciation value of the car.

  • Type of Insurance Policy

The type of policy one opts for is based on the value of the car. All the add-ons and the coverages other than the state-required minimum depend on the type of car you own.

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How does the car insurance premium decrease with age?

There are several factors that are used to calculate the insurance for an older car. However, when the car is subjected to regular wear and tear, it suffers a drop in the monetary value. As a result, the full coverage which you might have opted for in the beginning tends to be higher than the total value of the car.

This will culminate in the cheaper insurance rate for the older cars. This is because, even if you have collision and full coverage insurance, it’s usually cheaper for your insurance company to replace an older car.

High-tech equipment such as blind-spot sensors, GPS systems, and parallel park assist present in newer cars, are costlier to repair when compared to older cars. Even if it has features that are similar to the latest model the cost to repair the damages in an older car will be lesser.

Many insurance companies provide discounts based on your driving record. If you are responsible with your age-old car then the insurance premiums can get lower based on the discounts you become eligible for.

The frequency of your travels also accounts for the reduction in your policy premiums. If you do not use your old car for your daily commute, then there might be a drop in the average insurance rates.

Is there any chance for the insurance cost to increase with the age of a car?

If an old car you own is a standard model by a popular manufacturer, then, there won’t be any difficulty in obtaining the parts during repair. However, there are a few instances where an older car can be costly to insure.

If it is a classic or vintage car

If your car falls under this category, then it doesn’t suffer a depreciating value. Instead, its value tends to increase with age and is eligible for collector car insurance. This type of insurance is more expensive than regular coverage and is exclusive to such cars.

If your car lacks advanced safety features

Insurance providers provide discounts on those cars with better safety features. An older car may not be equipped with good safety features, causing a spike in the insurance premium.

If your car is susceptible to breakdowns

Breakdowns are common owing to the age of the car. Thus, one will have to opt for roadside assistance, causing an increased insurance premium rate.

How to get the best car insurance rates for older cars

Here are a few hacks that can save you money on the insurance of your old car.

Reconsider your premium

The premium you pay for your car doesn’t automatically change with time. Reconsidering what you have to pay for each month, must be proportional to your car’s depreciating value.

Raise your deductible

If you are looking for cheaper monthly payments, then increasing your deductible is an option you can consider. However, this will lead to a greater out-of-the-pocket payment in case of an accident.

Let go of additional coverage

If your car isn’t worth much, then opting out of comprehensive and collision coverage isn’t risky. One can drive around with the state-required minimum liability coverage.

Opt for Gap Insurance

If your insurance coverage does not cover the full worth of your vehicle, a gap insurance plan can help. Gap insurance can cover the gap between the market value and the amount you owe.

Improve the safety and security of your car

Re-equipping your old car with better safety devices can lower the insurance premiums. If you live in an area with higher auto theft, then having anti-theft features in your can reduce the risk of theft as well as the premium rates.

Why is minimum coverage a better investment for older cars?

Full coverage is a better option for cars that are less than ten-years-old. For instance, the average value of a five-year-old mid-size car is $7507. The cost of insuring it would be $2016 a year, which is clearly worth its value.

However, as it gets older, or after an at-fault accident, the insurance cost can increase by 93%. Hence the cost of insuring the same car would increase to $4395 on average. Similarly, the cost of insuring a car would only increase to even more than 105% of the car’s actual value once it crosses 15 years.

In this situation, opting out of full coverage is a clever option. In case your car gets totaled in a crash, then buying a new car would be better than repairing it with the insurance amount.

What are the benefits of switching to minimum coverage?

For a car that is older than ten years, switching to minimum coverage has its own monetary benefits. It may offer lesser protection, but what it has to offer would be in proportion to the value of your car which diminishes with age.

Though the cost of the insurance for your older car may not be greater than its value until is twenty-five years old, paying full coverage after 10 years may not be worth the money. Having liability coverage will only pay for the damage caused to another person.

How to obtain classic car insurance for older cars

Classic car insurance covers antique and classic vehicles. The cars that become eligible for this insurance must show an increase in value with the increase in the age of the car.  

  • Must be at least 20 years old
  • Less distance covered (2500 miles or less)
  • Not used for daily commute
  • Stored in a closed space
  • Must be a retired model for the manufacturer

Find a low-cost auto insurance

While making sure you have the necessary coverage according to your needs, it is important to stay within the budget and value of your car. Researching and comparing quotes can present you with the provider and the policy that suits you the best.

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