As seniors enter retirement, they may expect their car insurance premiums to decrease. However, the opposite is often true. Insurance companies typically raise rates for older drivers due to increased accident risks associated with aging.
According to the Insurance Institute for Highway Safety, fatality rates for drivers start to climb noticeably at age 70, peaking for those 85 and older. This occurs despite older adults generally driving fewer miles than younger motorists. Insurers factor this data into their premium calculations for senior drivers.
Data from Insure.com shows that car insurance rates for adults increase by an average of 15% between ages 65 and 75, translating to an annual increase of $267. Rates continue to rise beyond age 75, with significant variation between insurers. For example, at age 70, the average cost is $1,839, but prices range from $1,439 with Nationwide to $2,430 with Allstate.
Stothard Deal, TransUnion’s vice president of strategic planning for insurance, confirms that senior drivers pose a higher risk after accounting for other variables. However, there are strategies retirees can employ to mitigate these rising costs.
One effective method is participating in safe-driver programs. Many insurers offer telematics options that monitor driving habits through in-car devices or smartphone apps. Safe driving behaviors like adhering to speed limits and avoiding sudden movements can lead to savings of 10% or more, depending on the carrier. However, risky behaviors could result in rate increases.
Another cost-saving approach is completing an online defensive driving course. These programs are relatively inexpensive and can be completed at the driver’s own pace. Passing the course can lead to discounts of 8% to 10% for up to three years, varying by insurer.
Retirees should also explore other discount opportunities. Comparing quotes from multiple insurers or working with an independent agent can help find the best rates. Low-mileage insurance plans, which charge a flat monthly fee plus a per-mile rate, may be beneficial for those driving less than 8,000 miles annually. Some insurers offer specific senior discounts based on age or retired status.
Adjusting coverage limits is another potential money-saving strategy. Raising deductibles and lowering coverage limits can reduce premiums, though drivers should ensure they can afford higher out-of-pocket expenses if needed. For older, paid-off vehicles, switching to liability-only coverage might be financially prudent.
Howard Goldberg, vice president of the customer solutions center for Plymouth Rock Assurance, advises seniors to be strategic when purchasing vehicles. Cars with advanced safety features may qualify for lower insurance rates. Goldberg also recommends avoiding duplicate coverage, such as roadside assistance that may already be included with a new vehicle purchase.
Experts suggest reviewing insurance coverage, driving habits, and financial situations annually to determine if changes are necessary. Obtaining quotes from multiple companies ensures seniors receive the best possible rates.
While the prospect of rising car insurance premiums in retirement may be discouraging, implementing these strategies can help older drivers maintain affordable coverage. By demonstrating safe driving habits, taking advantage of discounts, and carefully considering coverage options, retirees can work to keep their insurance costs in check despite age-related rate increases.