The world of automobile insurance is extremely confusing and can prompt a host of questions for seniors and their caregivers.
How much coverage does an older driver need? Are some policies better than others for aging adults? How can a senior save money on their car insurance?
Assessing a senior's present plan
The first step is to thoroughly evaluate an elder's current automobile insurance plan to see if they can save money by cutting back on coverage.
There are eight different categories of automobile coverage:
- Personal injury protection (PIP)
- Medical coverage
- Uninsured motorist
- Underinsured motorist
- Rental reimbursement
Automobile insurance policies are typically a combination of several of these elements, but a driver (particularly an elderly one) isn't likely to need all eight types of coverage.
Most states require a motorist to have liability insurance. Some states also demand PIP. An insurance agent will be able to tell you which components a driver is required to have by law—everything else is up to the driver.
For example, a senior who doesn't do a lot of driving probably won't need too much rental reimbursement coverage (which helps cover the cost of renting a car if a person gets in an accident and their car is in the shop for several days). However, an older adult who lives in an area prone to severe weather may decide they want to have comprehensive coverage, which helps pay for damage due to natural forces such as water, wind, and hail.
Ways older drivers can save
The majority of insurance companies will automatically cut the rates of drivers once they reach a certain age (usually 55), according to Joe Ohman, a certified financial planner and founder of carinsurancecomparison.com, an automobile insurance policy comparison website.
Ohman says that there's no particular policy that's ideal for all elderly drivers, but he does offer a few money-saving tips for people over 55:
- Let your agent know when you retire: If an older adult is no longer making the 20-mile trek to the office every day, they might be able to get their monthly premium lowered. People who use their cars for "leisure driving" typically experience much cheaper rates, according to Ohman. Just make sure the senior notifies their agent of their change in mileage.
- Take a mature driver's course: A good number of insurance companies offer reduced rates to older drivers who take state-approved "defensive driving" programs. According to the National Safety Council (NSC), drivers who take these courses could be entitled to lower rates and may be able to get points taken off their driving record. To find defensive driving courses in your area, visit the NSC website.
- Ask about additional discounts: Insurance providers don't always advertise all of the discounts they offer, says Ohman. For example, some companies will cut a driver's rates if their car has certain safety features, such as antilock brakes. A senior should double-check with their agent to make sure they're taking advantage of all the money-saving opportunities their provider offers.
- Shop around: Some people prefer to stick with a particular insurance company for their auto coverage needs. Ohman points out that this habit has a double-edged quality to it. On the one hand, some insurance companies offer discounts for loyal customers. But, Ohman feels that seniors could save more money by periodically re-evaluating their options and comparing rates from different companies. "The same insurance company that had the cheapest rates years ago will not necessarily have the best rates today because of so many changing factors," he says.
- Be a safe driver: A driver who is claim free will generally be charged lower premiums than someone who has been in multiple claim-creating accidents, or committed several traffic violations.
How much money can a senior expect to save if they take these steps?
Depending on the situation, an older driver could save hundreds per year just by making sure they're maxing out their discounts, according to Ohman.