7 Tips for Saving on Car Insurance After You Retire

Shifting gears into retirement means more than just saying goodbye to the daily commute to the office. It often means adjusting your lifestyle and finances to align with your retirement savings.

Now that you’re retired, you’re likely driving less – your morning drive to the office is definitely in the rearview. As a result, it's the perfect time to reassess your car insurance needs and coverage to see if there are savings opportunities available now that you’re retired.

Below, we explore car insurance for seniors who are looking to save. The following strategies can help you cut back on coverage costs without compromising your safety.

Minimum Coverage Plan

Did you know that most states only require a minimum coverage policy, which includes bodily injury and property damage protection? In the event of an accident, minimum liability insurance covers damage to the other driver’s car and their medical bills.

Instead, you can switch to a minimum coverage policy, which can save you an average of $500 to $1,000 annually. However, keep in mind that when you switch to minimum coverage, damage to your vehicle or potential medical bills will not be covered for you.

Pay-Per-Mile Insurance

If you’re driving significantly less after retirement, why pay for high premiums when you don’t use your car that often? Instead, you can switch to a pay-per-mile policy that only charges you for the miles you actually drive.

Most top-rated insurance providers offer pay-per-mile coverage. You’ll pay a set base rate plus a few cents per mile. The base rate usually ranges around $20 to $40 per month, while the per-mile cost is around $0.02 to $0.10. Your base rate will remain constant, while your per-mile cost will vary depending on your mileage per month.

Let’s say you sign up for a pay-per-mile plan that has a $30 base rate and a $0.05 per-mile cost. If you drive an average of 200 miles per month, your estimated monthly car insurance cost would be:

(200 miles X $0.05) + $30 = $40

By switching to a pay-per-mile option, you could save up to 40%.

Discounts

For retirees who drive regularly or want to maintain their full-coverage policy, it might not be prudent to switch to a different policy. Nevertheless, you still have opportunities to save on car insurance through the various discounts offered by insurers.

Here are some discount options retirees can explore:

• Safe/Good Driver: Nearly every insurer offers around a 10% to 20% discount if you are a good driver. This means practicing safe driving habits like maintaining a good driving record without traffic violations, accidents, and claims. Traffic violations will include minor and major ones like speeding tickets, DUIs, and reckless driving. To sign up for a good discount, retirees will need to have a clean driving record for at least three years prior.
• Senior Driver: A smaller number of providers offer specific discounts on car insurance for seniors. However, Geico is known for its Prime Time discount for drivers over 50. Qualifying drivers with clean records could save between 5% and 25% on insurance premiums. Note that you will need to have a car insurance policy with Geico to qualify for this discount.
• Cars with Safety Features: Retirees who drive newer vehicles may qualify for a 5% to 15% discount, thanks to the safety features included in the car. Most insurance companies offer discounts if the vehicle you are insuring comes loaded with anti-lock brakes, anti-theft devices, electronic stability controls, blind-spot detection, lane departure warnings, automatic emergency braking, and forward collision warnings.
• Accident-Free Driver: In addition to practicing safe driving habits, most insurers will reward you with a discount if you remain accident-free for at least three years. On average, retirees who remain accident-free could save 10% to 30% on their premiums.
• Pay-in-Full: Many providers want to incentivize policyholders to pay for their insurance premiums. As a result, you could pay for the whole year upfront and earn 5% to 10% off.
• Automatic Payments: Similarly, if you sign up for an auto-pay option, your insurance provider may offer you a discount of 2% to 5%. Even though it is a minimal amount, it can still add up. Also, having the funds automatically withdrawn from your account can save you the hassle of manual payment processing.
• Green Vehicle: With the push towards more eco-friendly cars, you could earn a discount for insuring a green vehicle. If you have a hybrid or electric car, you could earn up to 5% to 10% off your premiums.

Bundle Plans

If you have multiple assets to insure in addition to your car, you could bundle the plans through a single provider for extra savings. Most insurance providers allow policyholders to bundle car, home, life, boat, RV, and renters insurance for a lower price than getting each policy individually.

On average, you could save 5% to 15% by bundling your insurance policies through a single provider. In addition to helping you save, bundling also makes it easier for you to manage your different policies. Pertinent plan information and claim histories will be available through a single provider and platform.

Defensive Driving Courses

While it is true that we become better drivers with more experience, it never hurts to brush up on good driving habits. In addition to helping improve your driving and safety, enrolling in a defensive driving course can also snag you an average of 10% off your premium.

The goals of a defensive driving course are to improve your driving skills, increase awareness, and decrease the likelihood of accidents. Here are the topics covered in defensive driving courses:

• Local, state, and federal traffic laws and regulations
• Techniques and strategies to reduce accidents like safe following distances, proper lane changes, and defensive driving tactics
• Training to identify and avoid hazardous and dangerous road conditions
• Information to prevent impaired driving, such as under the influence of drugs and/or alcohol
• Information to prevent distracted driving, such as texting, eating, and/or talking on a cellphone
• Guidance on maintaining proper vehicle maintenance and care to prevent accidents

You can sign up for a defensive driving course through AARP or the National Safety Council.

Telematics Programs

For retirees who are looking for an immediate savings option plus ongoing premium discounts, signing up for a telematics program can be their golden ticket. A telematics program works by tracking your real-time driving habits through a device installed in your vehicle.

As you maintain safe driving habits, your premiums could be adjusted. On average, retirees enrolled in a telematics program see a reduction of 5% to 40%. And remember the initial savings mentioned above? Some insurers offer an immediate discount of 5% to 10% when you sign up.

The installed device will monitor the following aspects of your driving:

• Speed
• Braking patterns
• Acceleration
• Cornering
• Mileage

This information is sent to the insurance company for analysis to determine your driving risk. If you maintain safe habits, you’ll likely have a low-risk score, resulting in higher savings potential.

Increase Your Deductible

Here’s an interesting fact about the relationship between car insurance premiums and deductibles: they work inversely. This means that the higher your premiums, the lower your deductible, and vice versa.

As a result, one way to save on car insurance after you retire is to increase your deductible. While you will pay more out-of-pocket if your vehicle is damaged, your monthly payments will be lower.

Here’s how much you could potentially save by increasing your deductible:

• Increasing your deductible from $250 to $500 can help you save around 15% to 30% ($150 to $300) on annual premiums.
• Increasing your deductible from $500 to $1,000 can help you save around 25% to 50% ($250 to $500) on annual premiums.

While experts recommend increasing your deductible to at least $1,000, you should only raise your deductible if you are comfortable paying out of pocket during an unexpected claim or accident. As a word to the wise, do not opt for a higher deductible if you cannot afford an unexpected expense.

Also, it is advised that you maintain emergency savings if you do raise your deductible. You will be responsible for covering the deductible before your car insurance provider covers the rest.

Final Thoughts

Even if you aren’t facing financial problems, saving on car insurance can free up some extra cash during retirement. Here’s a pro tip – you can use more than one of the strategies listed above to save on car insurance after you retire.