Senior Savings: The Best Car Insurance Rates for Retirees Heading Into 2025
With retirement comes the freedom to live life on your own terms, but it also brings the need for judicious financial planning. Car insurance rates go up when you turn 65 because seniors report more accidents and claims, according to Forbes Advisor.
Check Out: I’m an Economist: Here’s My Prediction for Social Security if Trump Wins the 2024 Election
Read Next: 7 Reasons You Shouldn’t Retire Before Speaking To a Financial Advisor
In 2025, the car insurance industry will see more rate increases, for instance, California, the state with the most drivers, will dramatically raise its liability limits on the first of the year. So it’s even more important than ever for retirees to budget wisely.
With that in mind, GoBankingRates tapped the expertise of the pros for strategies on how retirees can get the best car insurance rates heading into 2025 — Shavon Roman, Atlanta-based Licensed Insurance Agent and Personal Finance Expert of Heal. Plan. Invest., and Jacqueline Keer, owner of Keer & Heyer Insurance in Point Pleasant Beach, New Jersey.
Earning passive income doesn't need to be difficult. You can start this week.
Work With a Broker That Partners With Several Insurance Companies
Insurance brokers maintain relationships with multiple insurance companies, making it easier to find customers more competitive rates than an insurance agent representing one insurance agency.
Learn More: If You Have $1 Million in Retirement Savings, Here’s How Much You Could Withdraw Per Year
Most people are overinsured and have no idea why or how to fix it, said Roman. She recalls a couple in their mid-sixties coming to her for advice whose car insurance rates were double what they should have been paying.
“The husband was adamant about staying with the company they had been with for 40 years. He said State Farm had been good to them; they were in car accidents and handled the claims really well.”
But he questioned why his insurance had kept increasing over the years and said he didn’t understand his policy.
“Why don’t you hire someone that works for you?” said Roman. She referred them to an insurance broker that saved them $1,300 a year on their two cars.
“The policy was the exact same; the only difference was the insurance carrier wasn’t a big brand like State Farm or Allstate; it was a small company [with] strong ratings and a good claims history.”
Sometimes clients get tied into insurance company names that have been around for a long time, but there are good smaller companies regulated by the state with strong financial ratings, said Roman.
“Seniors on a fixed income should pay attention to their insurance policy, ” Roman said. “It doesn’t matter if it’s $2,000 or if it’s $20,000 a month, it’s still a fixed amount of money.”
Bundle Home and Auto
“One of the best things to do is bundle your homeowner and auto and even a personal umbrella policy,” said Keer.
The exception, Roman said, is if you live in Florida or California whose car insurance companies that used to carry homeowners and renters insurance have pulled out of the market.
“In those states, the way to get bundled car insurance is to add an umbrella liability policy.”
Protect Your Assets With an Umbrella Policy
If you’re in an accident, and your liability is $50,000, but you’re only insured for $25,000 that umbrella policy will pay the difference, so you’re not personally responsible for it, said Roman.
“The umbrella policy protects your income and your assets by paying the difference of the claim against your actual policy limits. Let’s face it, a small accident could easily be a six-figure liability, especially now [when] everything is so expensive; they aren’t carrying those high limits,” she said.
“If someone gets hurt and sues you, and you only have $15,000 per person, $30,000 per accident, and that person sues you for $500,000, you’ll pay out of pocket for that,” Keer added.
“That’s why it’s important to have an umbrella policy, if there’s a lawsuit and they’re awarded money.”
Enroll in a Defensive Driving Course
Another way to save money on your car insurance is to take a defensive driving course.
“AARP offers it; it takes six hours; it’s online, and you can do it from the comfort of your home,” said Roman. “I usually see discounts between 5 and 20% depending on the carrier and the state that client is in.”
Keer said in New Jersey, the defensive driver’s course could save people about 10% off their collision coverage, not their whole policy.
“If your policy is $1,000 a year but the portion of your policy is your collision coverage, say it’s $500 of that $1,000, you’re only going to save 10% on that $500.”
Consider Removing Collision If You Have an Old Car
“Retirees tend to keep their cars longer, but if you have a 15-year-old car, the value may not be enough to warrant keeping collision coverage,” said Keer. “If the car doesn’t have a lot of value, it’s $1,000 more that [you] have to put out for the car.”
Save With Low Mileage Car Insurance
Most people aren’t aware that there’s a type of insurance called low car mileage insurance, said Roman. “[It’s simply a discount based on the mileage you drive every year.”
“It’s really important, especially if you’re in your early sixties or mid-60s and you’re getting ready to retire or are retired, to adjust your commuting miles with your insurance carrier so you’re not paying the same rate as when you commuted to work every day,” said Roman.
Keer and Roman both recommend notifying your broker when you stop commuting to work.
Additional Ways Seniors Can Save on Car Insurance Rates
Paperless discount: With paperless billing, Keer has seen people save up as much as 10%.
Opt for an annual policy: Keer and Roman recommend annual policies because you won’t have to pay a rate increase until the policy renews. With a six-month policy, your rates can increase twice in one year.
Combine savings: Keer helped a client save $100 off her annual premium by combining a higher deductible, paperless billing, paying her policy in full and installing an app on her phone to monitor and reward her good driving behavior.
Pay in full: Paying your bill in full will save you from paying $5 for each installment, said Keer.
Enroll in autopay: You can save $20 to $30 on your bill by having your premium withdrawn electronically from your checking account or credit card.
More From GOBankingRates
7 Reasons A Financial Advisor Could Boost Your Savings in 2024
I'm an Economist: Here's My Prediction for Social Security If Kamala Harris Wins the Election
This is The Single Most Overlooked Tool for Becoming Debt-Free
This article originally appeared on GOBankingRates.com: Senior Savings: The Best Car Insurance Rates for Retirees Heading Into 2025