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While being a senior citizen comes with some perks, lower car insurance premiums isn't one of them.
“Certainly, the industry knows that as we get older, we’re not as quick … to make spur-of-the-moment decisions (while driving),” says Howard Goldberg, vice president of the customer solutions center for Plymouth Rock Assurance, which provides car and home insurance in six Eastern states.
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According to the Insurance Institute for Highway Safety, an industry research organization, the fatality rate for drivers begins to rise notably at age 70 and peaks for people 85 and older, even though these motorists average fewer miles behind the wheel than younger drivers.
Insurers take that into account when calculating premiums for older adults.
Car insurance rates for adults jump an average of 15% between the ages of 65 to 75, according to data from Insure.com. That’s an increase of $267 annually. And rates continue to creep upward past age 75, even as they vary significantly by insurer.
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Case in point: The average cost of car insurance for adults is $1,839 at age 70, according to Insure.com. But you could pay as little as $1,439 with Nationwide or as much as $2,430 with Allstate.
“After controlling for all other variables, senior drivers do pose a higher risk,” says Stothard Deal, TransUnion’s vice president of strategic planning for insurance.
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Demonstrate you’re a safe driver
One way retirees can save on car insurance is to take advantage of safe-driving discounts.
Deal recommends enrolling in telematics programs like State Farm’s Drive Save and Save or Snapshot from Progressive, which use an in-car device or a phone app to monitor driving habits.
If you drive safely, follow the speed limit, avoid sudden starts and stops, and so on, you may see savings of about 10% or more, depending on the carrier. The one drawback to monitoring your driving is that your rates may increase if you exhibit risky behaviors like speeding.
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Another proven way to save is to take an online defensive driving course. These programs cost relatively little (Geico, for example, charges policyholders $12.50 to participate in the National Safety Council’s defensive driving course).
Courses can last between one and eight hours, depending on what’s covered, and you can complete it at your own pace. If you pass, you’ll be eligible for a discount of 8% to 10% for up to three years, depending on your carrier.
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Check with your insurer to find out what type of defensive driving class you must take to qualify for this discount.
Take advantage of insurer discounts
You should also use the following strategies to save on your insurance premiums:
- Compare quotes. Request quotes from multiple insurers to find the best car insurance companies for older drivers or enlist the help of an independent agent who can find quotes for you.
- Look for low-mileage insurance. If you drive less than 8,000 miles per year, you may be able to save money by switching to a pay-per-mile policy. These plans charge a flat monthly fee plus a per-mile charge and can be significantly cheaper than traditional car insurance.
- Ask about car insurance discounts for retirees. Some may provide senior discounts based on age, while others may discount rates for those no longer commuting.
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- Adjust coverage limits. Raising deductibles and lowering coverage limits are two ways to reduce car insurance premiums. Higher deductibles mean lower premiums, but this only makes sense if you can afford the higher out-of-pocket expense if you have to file a claim. If you own an older vehicle that is paid for, it may be financially wise to drop full coverage in favor of a liability-only policy. Annually, review your insurance coverage, driving habits and financial situation to determine if and how your coverage should change. Then, get quotes from multiple companies to ensure you get the best car insurance rates for seniors.
- Be smart about your car purchase. When buying a vehicle, seniors should look for one that will meet their needs but also has safety features that could make it less costly to insure, Goldberg says. High-tech safety devices (such as a car alarm) could lower premiums by 9%, according to Insure.com.
- Skip the stuff you don’t need. Insurers may offer other add-ons, such as roadside assistance, but be sure you aren’t duplicating coverage. “It’s not uncommon that you may buy a new vehicle, and it comes with roadside assistance,” Goldberg says. “Make sure you only buy it once.”
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