Insurance Rates and Your Age

Age is one of the many factors insurance companies use to calculate your rate. Being younger can be a good thing if you are looking for health insurance and not so good if you are looking for car insurance. Yes, age is a factor (in most states) when companies determine your rate because of risk-factor, but that's not the whole story!

Insurance companies still have to have competitive rates or they wouldn't get any business. The difference between insurance companies and regular stores, is that you can't see how they calculate your rate in black and white. Insurers want to have better rates than their competition, but it doesn't always happen.

Let's break it down. There are 5 insurance companies (we can call them A,B,C,D & E) and 5 people (all different ages) looking for car insurance. Each insurance company wants to win the business and each person wants the best rate. So here is a hypothetical situation that could happen.

Heather, Age 20
Insurance Company C Wins!

Tommy, Age 25
Insurance Company A Wins!

Janet, Age 30
Insurance Company C Wins!

Martha, Age 35
Insurance Company E Wins!

John, Age 40
Insurance Company D Wins!

Ahh! Company B didn't do any business that day. Age is a factor in determining risk, and because it is, it's also a competition factor. In order for insurers to get business they must offer competitive rates and hope they have the lower rate then the rest of the pack. Consumers are getting smarter and shopping around and insurers adapt.