Why You Should Shop Around for New Car Insurance When You Retire


For many, retirement is a time of excitement and new adventures. For others, it can be a bit intimidating because they’ve become so accustomed to their routines.

When you retire, there is a lot more on your agenda than just leaving your job and settling into a new routine of relaxation and enjoying your free time. You’ll also have to reconsider the way you live, the bills you have, and how you’re spending your money. Fortunately, there are plenty of ways that you can save that you might not even think about including with your car insurance.

Car insurance is one of those things that a lot of people don’t like to deal with. It can be confusing, some companies and agents can make you feel like they’re not really trying to help you, and with so many different types of coverage and factors to consider, it might be nearly impossible for you to decide what’s best.

Fortunately, there are plenty of resources available today to take away the confusion and stress. That’s why now, more than ever, you should be reconsidering your auto insurance provider and whether you need a new policy.

Read on to learn more.

Why Reconsider Car Insurance in Retirement?

For starters, when you retire, your driving habits are probably going to change drastically. You are no longer commuting to work, driving at peak or high-risk hours, and so forth. There are a lot of life factors that change when you retire, including many that factor into auto premiums. We’ll get more into the details of how rates are calculated below, but for now, just know that your major life changes are making an impact.

How far do you (or did you) commute to work each day? If you drove 15 miles one way, that’s 30 miles a day and 150 days a week. Multiply that by a year, and you’re looking at 7,800 miles that you’re not putting on your vehicle after you retire.

Now, you might decide to start traveling once you retire, visiting more family and friends, or seeing sights that you’ve always wanted.

As you can already see, there are considerations coming into play about how your driving habits are going to change. Maybe they won’t change much at all. Perhaps the only thing that will change is your age on your next birthday or your status as a retiree instead of a working individual.

Either way, it certainly doesn’t hurt to re-evaluate your auto insurance options and make sure that you’re getting the best rates. This is something that should be done periodically, anyway, because rates and coverage are constantly changing.

How Car Insurance Rates are Calculated

Car insurance premiums are tricky and a little complex at times, but they don’t have to be impossible to understand. If you take a minute to do a little reading, you’ll see that most of the basic factors that influence insurance premiums are fairly understandable.

The main reason that people reconsider car insurance at retirement is because of the change in age and driving habits. At this point, a year or two isn’t going to make a huge difference in terms of age. However, when you go from driving in high-risk traffic during rush hour every day to not driving much at all, you can see how you become much less of a risk to the insurance companies.

Besides the car that you drive, insurance premiums for vehicles are calculated based on factors like:

  • Age and gender
  • Marital status
  • Number of claims and driving history
  • Address/location of the vehicle and where it is driven
  • Driving habits (how much and how far you drive, and why)
  • Driving history
  • Credit history
  • Education and occupation
  • Current length of relationship with insurer

Some of this won’t matter or won’t change when you retire, but at first glance, you can see at least two that do: driving habits and occupation.

This is why it’s always a good idea to get quotes for car insurance when you retire, from both your current insurer by asking for a rate or policy review, and from new providers that may offer better rates or more coverage for less since you’re no longer working and commuting.

Plus, it’s free to compare car insurance rates and you can switch at any time, even before your current policy expires.

See how much you can be saving. It only takes a few minutes!

Car Insurance Companies Specifically for Seniors: Should You Consider Them?

The next thing that many people want to know is whether they should consider switching to a car insurance company that specifically works with retired people or older adults. Companies like AAA, AARP, and USAA have programs specifically for seniors, with the latter serving veterans that have served in the U.S. Military and their families.

Of course, since provider history is part of what determines your rate, is it going to be worth it to switch?

The short answer is that it depends.

It depends on several factors, including what rate quotes you are given. The good thing about insurance is that you can get quotes before you switch, so you’ll know that you’re making the absolute best decision. And it’s free to compare quotes, regardless if you decide to switch or not.

If you haven’t been with your current company for a long time, or if they don’t seem to have the best rates after your retirement life change, you might want to shop around a little anyway. After all, you won’t know you’re missing out on better premiums or coverage if you never ask.

Consider the other services offered by these companies and consider whether you can benefit from them or if you’re just going to need quality car insurance. In some cases, it might be worthwhile to switch for the added perks or better insurance rates. In others, even though these companies are tailored specifically towards the needs of seniors and those in retirement, they might not be the ideal choice.

The best thing would be to consider these companies and their insurance premiums next to other insurers and see what you’re getting for the money. That way, you’ll get the right insurance and maybe even garner some extra benefits if AAA or AARP has more affordable policies or ones that better suit your needs.

Pay-Per-Mile Coverage Might be Worth Considering

If you want to take your car insurance to the next level, you can get on board with the latest trend: pay-per-mile coverage. While some companies already offered this coverage before COVID-19, many more have added it or increased their marketing of the policy since more people are working from home and driving so much less.

It’s also great for retirees who aren’t putting hundreds of miles on their vehicles for work every week.

Pay-per-mile coverage requires providing the insurer with an estimation of how much you drive on a daily, weekly, or annual basis. They will typically ask you to use one of their driver tracking devices to monitor your driving habits and location for the first month or two to get an idea of how accurate you were in your own estimation.

If they do have you use one of these devices, of course, it could work to your benefit. For starters, it may also identify other safe driving habits for which you can get a discount.

Pay-per-mile coverage is relatively new, and companies are still trying to work out some of the details. However, the concept is simple– because you don’t drive a lot, you shouldn’t pay a lot.

People whose cars mostly sit parked should not spend hundreds of dollars a month on car insurance. It’s just not practical because a parked car isn’t a risk. Thus, this coverage is designed for the exceptions where driving is minimal, but people still want good protection.

Every company is different, and you’ll have to get to know the rules of their specific program. However, the basic premise is that instead of paying a huge premium for coverage that you may not even need, you pay just for what you use.

If you drive 100 miles a week, you’re going to pay a lot less than the guy who drives 1,000 miles a week, even if you have the same driving history and record. While the policy was aimed at telecommuters, it happens to be ideal for several retirees. If you want to consider it, ask companies that offer this type of coverage to tell you more.

Will I Be Penalized for Being Retired?

Insurance premiums are affected by occupation, so this is a valid question. People who have degrees are typically seen to be more responsible and lower risk, while those with limited education or a standard occupation may present a higher risk.

Whether this is accurate or not doesn’t matter– it’s how the insurance companies work. If you retire, the good news is that you aren’t penalized for being “unemployed”. In fact, “retired” is an entirely different status and it’s a good one, to most insurance companies, at least.

Ultimately, when you retire, there is no real impact on the “occupation” factor of your premium. What’s more likely to be affected is what we’ve discussed at length– the miles you drive, the times of day that you drive, and the level of risk involved in your time on the road.

Therefore, you should not be worried about telling insurers that you’ve retired. Most of them will congratulate you and also advise you that it’s a good time to reconsider your auto insurance.

Many companies even offer specialized discounts for retirees. In most cases, you’re going to be rewarded for your new life journey, not penalized. Plus, it doesn’t take a lot of time to check it out, so you have nothing to lose.

The Cheapest Demographic?

That’s right—believe it or not, drivers aged 50-74 pay less for auto insurance than every other age group. While they might be getting older, their experience, driving history, and lack of driving, in general, allows them to be a lower risk.

They tend to be more careful about their driving habits, too, and still always lock their doors and secure their cars. Therefore, they present the lowest risk to most insurance providers and allow them to continue to offer better rates for those getting ready to enjoy the next stage of life after work.

Where do you go from here?

If you think that you want to look into lower auto insurance premiums, take the time to consider all of the information that we’ve discussed. Your car insurance bill could be significantly cheaper, or you might only save a few bucks here or there.

However, most people find that the former is true because they haven’t even looked at or shopped for new rates in several years, and sometimes even decades. You can use services like Compare.com to get quotes from as many companies as you like, read up more on discounts and retirement benefits related to insurance, and more.

When you contact companies about new insurance quotes, be sure to let them know why you’re inquiring now. Ask them about discounts or special programs for retirees, those who drive fewer miles, and those who are older or who have a better driving record. There may be more savings available than you think.

The most important thing is to take advantage of the resources out there when you retire, including those that can save you money on your car insurance rates.

It’s always a good idea to revisit your insurance every couple of years, but you should do it at milestones like retirement. After all, you’re going to be living on a fixed income, so saving money is going to be more necessary than you think.

Plus, it’s an easy and smart way to make your budget stretch further or get more money to spend on the things you want to enjoy. Either way, the worst thing you can do is nothing, so start shopping for new insurance rates today.

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