How Seniors Can Lower Their Cost of Auto Insurance
Despite what appears to be a healthy economy, 20 percent of Americans struggle to pay for basic necessities. The same is true for seniors, many of whom are living on a fixed income.
However, seniors may be able to reduce their cost of living by using use one of the following techniques to lower their cost of auto insurance.
Shop Around for the Best Rates
This may seem like a no-brainer, but it is extremely important to compare the rates of different insurance companies. Many seniors continue to do business with the same company year after year because of the convenience. In many cases, the insurance company automatically renews the policy and sets a new rate without policyholder approval. However, just because an insurance company had the best rates last year does not mean they have the best rates this year.
Insurance companies base their rates on variables that change from year to year. For instance, suppose the policyholder had a minor fender bender earlier in the year. When renewal time rolls around, the policyholder’s present insurance company might increase rates. However, another insurance company might not. Additionally, some of the factors that are used to calculate rates are not related to driving at all. Therefore, it always pays to shop around.
Look for Discounts
Mature Driver Discounts
Senior drivers are among the safest drivers on the road, according to Consumer Reports. Statistics show that crash rates per mile driven are much lower for seniors than for younger people.
Because of this, many insurance companies offer discounts for mature drivers. For instance, AARP has teamed up with The Hartford Company to offer auto insurance to drivers 50 and older, which could save seniors more than $350 per year.
Driver Course Discounts
Geico offers a six-hour mature driver course that provides discounts to seniors who successfully complete the course. Other insurance companies offer similar programs that provide discounts ranging from five percent to 15 percent.
AARP offers a “Smart Driver” course that can be taken online or in a classroom. Discounts are mandatory in 23 states for drivers who complete the online course and 35 states for drivers who complete the course in a classroom.
Many seniors drive less than they previously did, especially once they retire. Fewer miles translates into less risk, which is one of the factors insurance companies use to establish rates. Because of this, many companies offer low-mileage discounts. For example, Safeco offers a low-mileage discount of up to 20 percent.
Many insurance companies offer discounts to seniors who insure more than one vehicle with them. In most cases, the discounts are automatic. Multi-policy discounts are also available for motorcycles, boats, and recreational vehicles.
Some insurance companies also offer discounts for seniors who ensure their vehicles and their homes.
Change Coverage Options
Another way for seniors to lower the cost of their auto insurance is to change coverage options. Although the amounts may vary from state to state, most states have minimum coverage amounts that drivers must maintain. For instance, Florida’s minimum coverage is $10,000 property damage liability and $10,000 personal injury protection. If a senior is carrying more coverage than the minimum required, it may be possible to save money by reducing coverage amounts.
A senior with an older car might want to drop comprehensive and collision coverage and only keep liability. Collision is designed to repair or replace a car that is damaged in an accident. An older car, though, may not be worth that much money and a senior might be able to replace it with out-of-pocket money. In a sense, this is a form of self-insurance. To make the decision easier, some people keep collision coverage only when the annual premium is less than 10 percent of the vehicle’s replacement value.
Some policies offer options that are not directly related to damage liability or personal injury protection. Such options are known as riders. They cover such things as towing, rental cars, and accident forgiveness. While there is nothing inherently wrong with riders, a senior should consider whether riders are worth the cost. For example, a towing rider may not be worth the cost to a senior who belongs to an auto club that provides towing.
Speak to an Insurance Professional before Purchasing a Vehicle
Some vehicles cost more to insure than others because they are more expensive to replace or repair. In some cases, it is because they are more likely to be stolen. Another reason is that they have a lower safety rating, which increases the risk of injury. When purchasing a vehicle, it is also helpful to know whether adding safety options will lower the cost of auto insurance.
While it might seem like adding such features as automatic emergency braking would result in lower premiums, that is not always the case, according to the Chicago Tribune. It seems that insurers are still compiling data on some of the safety features and aren’t ready to offer discounts yet.
There are a number of ways that seniors can lower their cost of auto insurance, including shopping around for rates, looking for discounts, changing coverage options, and speaking to an insurance professional before purchasing a new car. The key is to secure a lower total price while making sure that coverage remains adequate.