Recent research conducted by a consumer rights protection group has revealed disproportionately higher insurance premiums paid by America’s oldest citizens. While there are legalities that allow insurance companies to charge slightly more once a person crosses a certain age threshold, this does not quite account for the massive difference in the cost of insurance for people over 75.
Average Cost Can Double in a Year
The study found that the average cost for an insurance policy for a person 74 years of age was roughly $626 per year, averaged across the country. Controlling for all other factors such as driving history, credit record and type of vehicle, the same policy shot up to $1,157 per year the minute that person turned 75.
While this looks like a clear cut case of discrimination, and of red tape causing misery, there might be some more systemic causes underlying this extreme gap between insurance premiums paid by people under 75 and those over.
The consumer rights group conducted a study, using online comparison sites, of 98 different insurance companies. Of those, only five offered insurance for people over 80, and all of those would only offer insurance at a higher rate. Across the country, only 60% of insurers claim to offer any coverage at all to people 81 years old or older.
Of course, there is one fatal flaw in all of this, and that is assuming that people over 75 are using insurance comparison websites to get their insurance. While a small minority of over-75s might be internet-capable and able to use an insurance comparison website, most are not. According to another (slightly older) study, only around 35% of Americans over 65 are online. And yet most senior citizens need vehicle insurance.
The Grandparent Trap
One of the main reasons named by the consumer rights group study for higher premiums amongst older people is automatic renewals. Each year we get a letter telling us how much our insurance has gone up by, and it’s always much easier to just accept it than go around hunting for a new insurance provider every year.
While someone in their twenties might get such a letter, spend the evening online comparing quotes and quickly change insurers, a person over 70 might not even think to go through such a process. They might not even be aware that such a thing can be done, and so will often stick with the insurance company they’ve used for decades. This is because the process of manually contacting individual agents is time and energy consuming, and insurance is not quite the same as it was 30 years ago.
So if you have elderly parents or grandparents, take some time to have a look through their insurance. Even if you don’t know much, you can quickly hop online and look at some car insurance quotes for them, or even teach them how to apply for car insurance quotes – you might be able to save them a few hundred dollars.