How Does Retirement Affect Auto Insurance?

Retirement is a significant life transition and an opportune moment to review your car insurance arrangements. Several factors, including the drivers and vehicles covered, annual mileage, commute, location, credit score, age, and eligible discounts, can change considerably. Even minor adjustments to these aspects can result in noticeable overall savings on your vehicle insurance. Regularly reviewing and shopping around to find the most competitive insurer after retirement helps you mitigate potentially rising senior driver auto insurance rates, especially after age 70.

Retirement itself may not directly impact your car insurance rates, but adjustments in your driving behavior and mileage can lead to reduced insurance premiums for two primary reasons. Firstly, retirees typically log fewer miles on the road, rendering them eligible for low mileage discounts. Secondly, they can transition to “pleasure use” coverage since they no longer require a commute to work, thereby further cutting their insurance premiums. Commuting often drives up insurance costs due to increased annual mileage and exposure to risk associated with rush hour traffic.

If you’ve recently entered retirement, you may have noticed a decrease in your monthly income. Consequently, it’s a good time to consider ways to reduce your expenses. One effective approach is to trim your vehicle insurance costs, especially if you find yourself driving less frequently. Additionally, if you’re looking to cut down on home insurance expenses, this could be an opportunity to bundle your home and auto insurance policies together, potentially leading to cost savings.

In retirement, there are various ways to potentially save on car insurance. For instance, relocating to the suburbs with lower rates, removing children from your policy if they’ve left home, switching to a safer car, and eliminating a second vehicle if your partner is also retired can all contribute to reduced insurance expenses.

Here are some of the ways you can reduce your car insurance costs after you retire:

1) Low mileage discount is usually achievable for a retired driver. According to data from the Federal Highway Administration, the average annual mileage is 14,263 miles in the US. If you are driving much less, you may be able to get lower rates with some companies. However, keep in mind that most auto insurance companies don’t offer meaningful low mileage discounts if they cannot verify your mileage. Some companies may offer the discount based on odometer readings. However, you may need to sign up for a telematics based vehicle insurance program (discussed below) to get a meaningful discount.

2) Taking an approved defensive driving course is usually cheap, allows you to brush up on your driving and can qualify people who are over 55 years old for 5 – 10% discount, depending on the state and insurer.

3) Pleasure use only car insurance policies are usually cheaper and suitable for retirees.

4) Bundling home and auto insurance can be a good way of saving money since most people buy both policies anyway. Many companies offer as high as 15% discounts for buying these two policies together from the same carrier.

5) Improving credit score can qualify most motorists for much lower rates. Paying some of the debt, giving up one of the credit cards are some of the ways to improve your credit score, along with paying your commitments on time.

6) Usage-based programs allow motorists to show how good a driver they are and prove their low mileage. Typically, retirees are careful drivers but they may face higher premiums due to their advancing age. Also, they usually don’t travel as much. Therefore, they may be able to save up to 30% with telematics based car insurance policies. This may not work if you are the opposite and suddenly become a nervous driver.

7) Membership discounts may help you save on auto insurance as well. You may already have membership to organizations like AARP or AAA and you might want to check if they help you get lower vehicle insurance rates.

8) Slim down your coverage. Often people forget about some of the extras they bought over the years. If you don’t remove them and don’t change your insurer, your insurer will price them each time you renew. For example, you may not really need Rental Car Reimbursement anymore since you don’t really need to keep a job. Depending on your car’s value you could even drop Collision and Comprehensive coverage and cut your car insurance significantly.

9) If you are looking for a new auto, make sure you get a few insurance quotes for it so that you don’t buy a vehicle, which is expensive to insure.

10) Shopping around is the easiest way of saving money. When it comes to retirement, which marks a substantial life transition, it’s advisable to conduct a thorough search for the most competitive auto insurance provider that suits your new situation. If you’ve been with your current insurer for an extended period, there’s potential for substantial savings. Additionally, even if you decide not to switch providers in the end, you should update your details with your current insurer and ask them to re-quote based on new information.