A retired couple unloads groceries from their car after learning how to save on car insurance for retirees.

5 Ways Retirees Can Save On Car Insurance

01/25/2021

Adjusting your retirement budget includes scaling back on essential expenses. Here are 5 great ways retirees can save on car insurance policies.

Retirement comes with newfound freedom—except when it comes to living on a fixed budget. Car insurance is part of that budget, and unfortunately, as you age, rates will climb. You were likely enjoying low insurance rates in middle age, when drivers tend to be safer and spend less time in their cars, according to the Insurance Information Institute.

Once you are retired, however, those rates will creep upward. Drivers over age 65 have a higher risk of having a serious collision per mile compared with any other age group except those under age 25, according to the American Automobile Association.

Fortunately, several smart strategies can offset the upward trajectory of the cost of premiums. Here are five ways to save on car insurance and make your retirement budget go further.

1. Take a Driving Course for Seniors

Taking a course to sharpen your driving skills can not only help you save on insurance, it can help keep you safe. AAA’s Roadwise Driver course, offered online or in a classroom, can help you to freshen your driving knowledge and teach you how to get the most out of your vehicle to keep yourself, your passengers and others on the road safe.

The course goes beyond simple driving tips, providing comprehensive knowledge about up-to-date driving techniques and how to make the newest vehicle safety technologies work best for you. These lessons give you the tools to help compensate for slower reflexes, impaired eyesight and hearing, the effects of medications and even how to deal with road rage incidents.

In many states the insurance discounts are mandatory. Other states offer their own driver-improvement courses online and require insurance companies to give rate discounts to customers who complete them. You can check with your insurance professional for information about courses in your state that might qualify you for senior car insurance discounts if you’re over 55.

2. Bundle Auto and Home Insurance Policies

Bundling, combining all of your insurance coverage under one carrier, frequently can be less expensive. For instance, some companies offer a lower rate when you buy policies for multiple vehicles, if you have them, or when you buy both car and homeowner or renter policies.

The key part of this strategy is shopping around and comparing whether it’s better to take this route. Your credit score, claim history, where you live, how much you drive, the kind of coverage you need and other factors all influence your rate. Companies report savings of up to 30 percent when you combine auto with your home, condo, renters, life or umbrella policies.

Having one carrier for multiple policies also simplifies paying bills and keeping track of updates—including rate increases that may prompt you to go shopping again.

3. Stay Safe to Save

Driving safely drives savings, too. Just as when you were younger, keeping a clean driving record means you can save on insurance. Carriers increase premiums by a certain percentage if you’re at fault in the incident related to a claim. You’ll have to pay the increased premium for the next three years, according to III.

Keeping a clean driving record first requires a frank assessment of your driving abilities. AAA offers a self-rating questionnaire to help you examine your driving performance. Your score will reveal your strengths and weaknesses and suggestions for how to improve.

More help can come from vehicle safety features such as front-crash prevention systems, blind-spot detection and lane-departure warning systems, which have been shown to reduce crashes and claim rates. Studies revealed rearview cameras and rear parking sensors are especially effective in preventing crashes among drivers 70 and older, according to the Highway Loss Data Institute.

4. Pick a Practical Car

Cars that are safe, cost less to repair and replace and are less likely to be stolen are also less expensive to insure. So if you choose wisely on your next vehicle—or switch now—you could start saving on multiple fronts. As you shop for a new or used model, compare what it would cost to insure them, too.

A comprehensive resource for safety rankings is the Insurance Institute for Highway Safety’s Top Safety Pick ratings tool. These ratings consider factors including roof strength, head restraint tests, crash prevention features and headlight quality.

Dozens of models are evaluated within size categories. This helps you make better comparisons because bigger, heavier vehicles already typically offer more protection than smaller, lighter ones. The site lists award-winning models going back to 2006, so it can help in evaluating used cars, too.

5. Optimize Your Insurance Coverage

Making sure you’re carrying the right kind of coverage can bring significant savings in premium costs. At a minimum, you should have liability coverage required by state law, but it shouldn’t stop there.

That minimum amount, however, is typically not enough to cover the full cost of medical care and vehicle repair after an accident, so it’s important to have enough liability insurance to protect your assets. Your net worth could be wiped out from accident-related costs, particularly if a court finds you’re at fault and orders you to pay the balance of what isn’t covered by insurance.

When it comes to collision and comprehensive insurance, scaling back coverage as your car ages is a smart way to save. As your car’s value declines, it may not make sense to pay for repairs from an accident—so you may be paying more for the insurance than it’s worth.

First, turn to the Kelly Blue Book and determine your car’s value. Using the standard industry formula, if that amount is less than 10 times the insurance premium, you’ll likely want to scale it back. If your car is worth less than $1,000, you may want to consider dropping collision and comprehensive insurance entirely.

Adjusting the deductible offers savings, too. Increasing it will lower your annual premium. Remember, though, that the deductible is how much you pay on a claim before insurance covers the rest, so be sure to have enough in your emergency budget to pay the higher deductible in case of a claim.

Taking action on these five tips could help save hundreds of dollars in annual insurance costs, but there’s another goal beyond that—saving money that you can put toward enjoying a fulfilling retirement.

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