Motorists are being blocked from getting lower insurance prices because they drive older cars.
Two of the country's biggest motor insurers, Aviva and Allianz, are refusing to provide cover to new customers driving cars 15 years or older, even if they hold a valid NCT proving that their vehicles are safe to drive.
The insurers claimed these cars tended to be involved in more collisions, were used in fraud cases, had bald tyres and were poorly maintained.
The exclusion only applies to new customers, the companies said, adding that existing clients whose cars had passed the threshold would continue to get insurance cover.
But the restrictions come amid a steady increase in motor insurance premiums, which rose 12pc last year. Experts have warned motorists to expect further hikes in 2015 of between 8pc and 15pc, due to the high cost of settling claims.
Aviva Insurance said the decision was taken based on risk assessments and applied even if the car had passed an NCT.
The move comes despite data from the Road Safety Authority (RSA), which shows that vehicle condition is only a contributory factor in 0.2pc of all fatal and serious-injury collisions - or seven from more than 3,200 which occurred in 2012.
The move affects almost 250,000 vehicles on the roads, or 13pc of the entire national fleet of 1.91 million cars.
The Consumers Association of Ireland said the move would restrict competition in the market and lead to higher prices for some motorists.
"The insurance companies can determine what they want and you have to take it or leave it," chief executive Dermott Jewell said.
When you have two of the largest withdrawing that cover, it skews the market. It reduces competition significantly, but also puts drivers in the position where, if other companies take the same view, they will load the owners of those cars, which is not fair or reasonable either."
Restrictions on vehicle age are also applied by Liberty Insurance, which will not insure cars 20 years or older. But not all companies are refusing to provide cover.
AXA Insurance said it had one of the widest acceptance criteria in the market and did not restrict vehicles but would seek a copy of the current NCT.
FBD said the age of the vehicle was a factor, but it would not result in cover being refused.
Other risk factors taken into account included the age of the motorist and their driving history.
The RSA could not be reached for comment.
Just over half of all fatal collisions which occurred in 2012 involved vehicles 10 years or older, but garda sources said it would be a "significant stretch" to link the condition of the car with fatal collisions, most of which were caused by driver error.
"There are so many factors at stake," one said. "The condition of the vehicle is such a small factor in general that it's difficult to say a 15-year vehicle is dangerous compared to a 14-year old one."
All cars over 10 years old are subject to an annual NCT since 2011. The Road Safety Authority said the average pass rate for a car aged four years was 75pc in 2012, compared with 42pc for 10-year-old vehicles.
Aviva defended its policy, which came into force last month, saying it was based on its claims experience around older cars, which had been "extremely poor".
"There's the age of the vehicle, but also issues about maintenance," a spokeswoman said.
"Claims have increased for these cars and we have found a large incidence of bad claims and large losses.
"In addition, we have found that a lot of these old vehicles are often associated with fraud, like cash for crash.
"You go on the basis of what your claims experience is. Ultimately these are commercial decisions."
The Department of Transport added that the decision was "regrettable" but noted that there were 30 companies on the market offering cover.