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Car Insurance for Retirees

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The lowdown...
  • If you have existing auto coverage and you’re about to retire, you’ll need to readdress your insurance needs
  • Update your employment status to retired as soon as you can to receive a special retiree rate
  • If you once commuted to work, make sure to tell the carrier you’re only driving for pleasure now
  • When you’re driving cross-country in your vehicle or you’re towing it behind an RV, assess new risks on the road
  • When you live in between states, it’s your duty to buy insurance in the state where the car is registered

All your life, financial advisers, and family members urged you to put away for your retirement. When you have 20 to 30 years to worry about putting money away, it doesn’t seem like that urgent of a matter.

It’s not until you’re approaching age 65 that you start to stress about retirement and how much you’ll have to live off of.

According to recent surveys, 84 percent of retirees depend on Social Security income and they receive a full benefit of $1298 per month.

That benefit amount accounts for about one-third of the average senior’s total income, which leaves them very financially restricted. As you’re planning for your retirements, it’s best to reassess your auto insurance needs.

Compare auto insurance rates side-by-side to find the best company for your needs.

Here’s a guide to help you reduce your insurance costs:

You Could Be Paying Way Too Much on Your Current Policy

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Being loyal is a good thing in most instances but it doesn’t always pay to be loyal when you’re an insurance consumer.

Most older drivers choose to keep their insurance with the same agent or carrier for a decade or more. When you’re loyal you’ll get discounts but you’re less likely to make much-needed policy updates when things in your life change.

The average senior policyholder doesn’t do a check-up on their insurance on a regular basis.

If you’re guilty of just paying your renewals without reviewing your coverage or premiums, you could be overpaying because of inaccurate information.

When you check-up your policies, you can catch expensive mistakes and find a better rate in the process.

Update Your Employment Status Right Away

Some insurance check-ups can wait until your renewal but there are changes that you can make right away to avoid paying too much after a lifestyle change.

When you say goodbye to all of your coworkers for the last time, you should set aside a little time to call your agent to change your employment status from employed to retired.

Changing your employment status in retirement is an update that will almost certainly give you a better rate.

You might not see the correlation between working and the risk of an accident but insurance companies do. Typically, someone who is happy in retirement will drive in less and in less stressful conditions.

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Don’t Forget to Make Changes to Usage and Mileage

Another change that most newly retired drivers have to make concerns how the car is driven. When you’re taking your car on the monotonous daily commute, you pay both a commuter rate and extra premiums for longer commutes.

The difference between a pleasure rate and a commuter rate is noticeable.

Unless you’re going to work a part-time job a few days a week to supplement your income, you can change the rating of your primary vehicle from a commuter vehicle to a pleasure vehicle and save money.

You’ll also be eligible for a lower premium if you start to reduce how much you drive.

How much can you drive if you want a low-mileage discount?

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Some of your friends might boast about getting a low-mileage discount on their insurance plan. If you’re retiring, you’re more likely to qualify but you aren’t guaranteed to get the discount just because you’re no longer working.

Some carriers have more flexible mileage rating bands than others. It’s typical for a carrier to require their policyholders to drive less than 5,000 in a specific vehicle for the car to get the low-mileage discount.

Some carriers will give a super low-mileage rate when the car is driven under 3,000 miles annually.

Your Rates Will Only Be Low at the Beginning of Retirement

With the new pleasure rating and low mileage rating, you might get used to paying low rates for car insurance in your Golden Years. Unfortunately, your rates won’t always stay low.

In your early 60s, your age doesn’t have a dramatic effect on rates, but when you reach 65 and above, your rates will start to climb.

If you intend to keep your license and continue to drive, you’re going to have to find a good policy that suited for retired drivers. You’ll have to shop for discounts and coverage from a carrier that wants to insure older drivers.

Once you reach age 80, you can expect to pay as much as four times what a teen pays for insurance.

What discounts should you look for as a senior?

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Seniors can qualify for age-specific discounts if they shop for insurance with the right carriers.

If you are eligible for discounts like these, it can save you as much a 40 percent off of some of the more expensive options that you have on your policy. Here are some of the most popular senior discount options:

  • Mature Driver Training Discount for taking a defensive driving course
  • Daylight Driving for seniors who don’t drive after sunset
  • Senior Discount offered by some popular carriers
  • Usage-based discounts for performance behind the wheel

Where should you insure your vehicle when you’re a snowbird?

If you prefer to live in warm weather and you can afford to maintain two homes, you might choose to be a snowbird.

Snowbirds live between a colder area and an area with more tropical climates. This lifestyle poses unique risks. You will have to keep your car insured in the state where the vehicle is going to be registered.

Retirees need to consider how they are living when they buy any type of insurance. If you’re looking specifically for auto insurance, don’t overlook how important it is to shop around.

You can get several different deals on your coverage if you’re willing to price products in the market.

Use our online quote tool to do your homework and you can thoroughly compare all of the best estimates.

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