Retirement Planners: Auto Insurance Allies?

Retirement planners can help with auto insurance in several ways. Firstly, they can advise on adjusting your coverage to your new driving habits, such as reduced mileage or a change in vehicle type. This can lead to lower premiums and more affordable insurance. Secondly, retirement planners can help identify discounts that you may be eligible for, such as those offered to seniors, military personnel, or members of certain organisations. Finally, retirement planners can assist in shopping around and negotiating with multiple insurers to find the most cost-effective policy that fits within your retirement budget. It is recommended to review your auto insurance options regularly and get quotes from several insurers to ensure you are getting the best rate.

Reassess your coverage needs

Retirement often comes with a change in your driving habits and maybe even the car you drive. For example, you may be driving less, downsizing to a smaller car, or paying off your current one. It's important to reassess your insurance needs to determine if your current policy is adequate. You may discover you're paying for more insurance than you need.

Talk to your insurer

Speak with your insurer to identify ways your coverage could adjust to your new driving circumstances. Here are some factors of your auto insurance policy you might review:

• Lower coverage for less driving: You may not need to carry high levels of coverage if you're driving less. With a reduced likelihood of a serious accident, you might consider lowering your bodily injury coverage amounts.
• Higher liability limits: On the other hand, you could opt for higher liability limits if you're concerned about protecting your assets if you're involved in an accident and the other driver sues you.
• Review types of coverage: Review the types of coverage you carry to determine if they're still needed. If you're no longer making payments to a lender or leasing company, you might consider dropping comprehensive and collision coverage from your policy.
• The type of car you drive: The type of car you drive can impact how much you pay for auto insurance. Downsizing to a smaller economy car could lower your premiums, especially if your current car is a more expensive luxury vehicle. Conversely, newer vehicles tend to carry higher premiums since the costs for repair and replacement are typically higher than for older vehicles.

Alternative coverage

Many auto insurers offer alternatives to traditional insurance to help you stay on budget, such as pay-per-mile insurance rates and usage-based coverage. If your driving mileage is low, these policies may work in your favor. With pay-per-mile insurance, you'll typically pay a set rate for every mile you drive on top of a base premium. Usage-based insurance policies are broader in scope and may reward you for safe driving habits. Using a telematics device in your car, your insurer can track how many miles you drive, your speed, braking patterns, and other driving behaviors.

Ask about discounts

Asking about discounts is a great way to save money on your auto insurance. There are many different types of discounts available, and you may be surprised at how much you can save. Here are some of the most common discounts to ask about:

Multi-Policy Discount

This discount is often called "bundling" and is one of the biggest discounts you can get on your auto insurance. You can typically save between 5% and 25% when you bundle your auto insurance with other policies such as home, condo, renters, motorcycle, boat, or life insurance. For example, State Farm offers an average discount of 23% for customers who bundle their auto and home insurance policies.

Multi-Car Insurance Discount

If you insure more than one car with the same insurance company, you can usually get a discount of up to 8% to 25%.

Vehicle Safety Discounts

If your car has safety features such as anti-lock brakes, airbags, and daytime running lights, you may be eligible for a discount. Airbag discounts can be as much as 40% applied to your medical payments or personal injury protection coverage.

Anti-Theft Device Discounts

If your car has anti-theft features, you can typically get a discount of up to 5% to 25% off your comprehensive coverage. Examples of anti-theft devices include GPS-based systems, stolen vehicle recovery systems, and VIN etching.

Good Driver Discounts

If you have a good driving record with no accidents or violations, you can often get a discount of 10% to 40%. For example, GEICO offers a discount of up to 22% if you have had no accidents for five consecutive years.

Defensive Driver Discounts

Some insurance companies offer a discount if you take an approved defensive driving course. This discount typically ranges from 5% to 10% and may be mandated by state law for mature drivers.

Good Student Discount

If you or your student driver maintains a B average or above and meets certain age requirements, you may qualify for a discount of 8% to 25%.

Student Away at School Discount

If your student is away at school and doesn't have a car, you may be able to get a discount. The student must typically be under a certain age and a certain distance from home.

Pay-in-Full Discount

If you pay your policy term upfront, you can usually get a discount of 6% to 14%.

Electronic Funds Transfer (EFT) Discount

If you pay in installments using automatic withdrawals, you may be eligible for a small discount of 3% to 6%.

Paperless Discount

Some insurance companies offer a small discount of around 3% if you choose to go paperless and receive your policy documents and billing electronically.

Online Quote Discount

Some companies offer a discount of 4% to 12% if you get an online quote and sign up for a policy.

Advance Quote Discount

Shopping around and buying a policy in advance of your current one expiring can bring a discount of 2% to 15%.

Occupational Discounts

Depending on your occupation, you may qualify for a discount. For example, Geico offers up to a 15% discount for military personnel.

Alumni Associations and Professional Organizations

You may be able to get a discount if you belong to alumni associations, fraternities, sororities, or professional organizations. For example, Geico gives 12% to 15% discounts to members of many alumni, educational, and professional organizations.

Usage-Based Insurance Program Discount

Your insurance company might offer a discount if you enrol in a usage-based insurance (UBI) program, which adjusts insurance rates based on how often and how well you drive. The discount is typically between 5% and 40%.

Remember that not all discounts are automatic, so it's a good idea to ask your insurance agent regularly about any new discounts that may be available to you.

Shop around for insurance

Shopping around for auto insurance is a great way to save money, but it can feel daunting if you haven't done it in a while. However, it's a simple process that only requires a little information, an idea of the coverage you need, and a few minutes to compare quotes.

Understand Your Coverage Options

First, you need to understand the different types of auto insurance coverage available. The most basic policy will include only auto liability coverage, which will get you a cheaper rate but may not provide the level of protection you need. If you lease or finance your car, your lender will likely require comprehensive and collision insurance. Even if your car is paid off, consider adding these coverages if your car is new to avoid paying expensive repair bills yourself.

Choose Your Deductible

Your car insurance deductible is the amount you need to pay towards a claim before your insurance coverage kicks in. Typically, you will have a deductible for comprehensive, collision, and gap insurance coverages. A higher deductible will result in a lower insurance rate, but make sure you can afford to pay the deductible if you need to file a claim.

Compare Premium Quotes

The car insurance premium is the bottom line—the total cost of your insurance per payment cycle. When comparing quotes, ensure that each quote includes the same coverages, limits, and deductible amounts so that you are making an accurate comparison. Use an online comparison tool or an insurance agent to get quotes from multiple insurers and find the best rate for your desired coverage.

When to Shop for Insurance

It's a good idea to shop for auto insurance at least once a year, as rates change frequently. Additionally, if you're adding a teenager to your policy or experiencing other life changes, it's a perfect time to look for a new insurer who may offer discounts that better fit your situation.

Factors Affecting Your Insurance Rate

When shopping for auto insurance, keep in mind that various factors will influence your rate. These include your age, driving history, credit score, vehicle type, and location. For example, younger and older drivers tend to have higher rates, and drivers with poor credit scores or a history of accidents will usually pay more for insurance. The type of vehicle you drive also matters, as insuring a truck or luxury car is typically more expensive than insuring a standard sedan. Finally, your location can significantly impact your rate, especially if you live in an area prone to natural disasters or with strict state regulations.

Get a mileage-based reduction

If you've stopped commuting to the office and now work from home or have retired, you may be eligible for a mileage-based reduction on your auto insurance. Most auto insurers offer discounts when your annual mileage drops below 7,000 or 7,500 miles, which is significantly less than the average 12,000 to 13,500 miles driven by most Americans each year.

The mileage you put on your car influences how much insurers charge for premiums. The more miles you drive, the more likely you are to get into an accident and file an insurance claim. So, insurance companies consider you a higher risk and your rates will reflect this. Conversely, if you drive less, you pose less risk to your insurer and will pay less.

Insurance companies have mileage brackets to determine rates based on mileage. The brackets vary from company to company, but there are some common ones that many insurers use. For example, there may be an average increase of 10% from 5,000 miles, 7% from 7,500 miles, 4% from 10,000 miles, and 25% from 12,000 miles.

Some insurers offer bigger low-mileage discounts if you drive less than 7,000 or 5,000 miles a year. For instance, State Farm offers a low-mileage discount of up to 30% for drivers travelling fewer than 7,500 miles annually. USAA, Safeco, and Geico also award low-mileage insurance discounts.

If you drive less than 26 miles per week, you may be eligible for "pay per mile" insurance, where you pay for each mile you drive. Metromile and Mile Auto are two insurers that offer this type of coverage.

It's important to note that not all insurers will offer a discount for low mileage, even if they track how far you drive. Before enrolling in a program, find out if mileage is tracked and whether it's factored into your rate.

Drop unnecessary coverage

Dropping unnecessary coverage can help you save money on your auto insurance. Here are some factors to consider when deciding whether to drop comprehensive or collision coverage from your auto insurance policy:

• Parking situation: If you park your car in a garage and protect it from animals, falling objects, and severe weather, you may consider dropping comprehensive coverage.
• Vehicle value: If your car is worth less than your comprehensive coverage deductible, dropping this coverage might be a good idea.
• Vehicle age and mileage: If you drive an older car with high mileage, the value of your car has likely dropped, and you may not need the protection of full coverage.
• Financial situation: If the cost of auto insurance is straining your budget, consider stepping down from full coverage to save money without significantly increasing your risk.
• Risk tolerance: If you have a high-risk tolerance, you may prefer to save money on premiums and accept the financial burden of paying for accident repairs yourself.
• Driving habits: If you rarely drive your car or have low annual mileage, you have a lower risk of accidents and may not need full coverage.
• Alternative coverage: Consider pay-per-mile insurance or usage-based coverage if you have low mileage. These policies may offer lower rates for infrequent drivers.
• Cost-benefit analysis: Compare the cost of your full coverage insurance to the value of your vehicle. If the annual cost of full coverage is more than 10% of your car's value, it may be wise to switch to liability-only coverage.

Frequently asked questions