Are you planning to retire in the next few years? It is a big step to take, that’s for sure. But, retirement also opens up a whole new chapter of your life. All the same, a new chapter means making some changes to your life. That also means reexamining your financial assets and your insurance coverage, including your car insurance. Retirement means that your need for coverage might change. What parts of your policy should you look at adjusting?
You don’t necessarily have to make major changes to your car insurance when you retire. However, if you think about how your need for coverage change, you might find benefits.
Driving Risks Change After Retirement
When you retire, your daily routine will likely change. You might no longer have to follow the same daily schedule you once did. Therefore, your driving routine might change.
On one hand, you might no longer have to brave rush hour traffic. You might no longer have to drive nearly as much as you once did. Most peoples’ overall driving actually drops in retirement.
On the other hand, however, your driving in retirement might actually increase. You could decide to take road trips, or spend a lot of time running the errands you couldn’t get to while working. You might even take on a part-time job, such as driving for a rideshare company.
Regardless of whether you drive more or less in retirement, your overall driving risks will change. That is because your activities change significantly. These changes might have an effect on your car insurance.
How Driving Risks Change
When setting your premiums, your car insurer will look at your overall likelihood of filing a claim on the policy. That is your risk rating. Those with lower risks usually pay less for their coverage. Retirement might affect your risk rating.
In some cases, these risks will change for the better. You no longer drive as much, so your risks of wrecks might decrease. You don’t spend as much time on the road, so the likelihood of encountering problems might drop. Your policy rates might actually drop for the better.
In other cases, however, your driving risks might change for the worse. For example, if you drive more in retirement, then you might face higher accident risks. Your car’s value might actually drop faster as well.
Additionally, aging does sometimes influence a driver’s personal risks. Middle-aged people usually pay favorable rates, because they have experience behind the wheel. However, as you get older, the infirmities that come with aging might actually cause your rates to rise. For example, diminished eyesight or lowered reaction time might raise your risk of accidents. That could therefore force insurers to raise your policy rates.
Therefore, the way these risks change could cause you to really need to examine your car insurance upon retirement. Agents understand how retirement might affect your specific policy. They can therefore help you better determine the right course of action.
Practical Steps for Changing Car Insurance in Retirement
As you prepare to retire, talk to your car insurance agent. They might be able to clue you in on various changes you might need to make. With the right care, you’ll always make sure you carry the right policy, but also pay the right price.
· If you will drive less in retirement, your agent might be able to lower your mileage rate on your policy. This change will reflect that you drive less, and therefore face fewer chances to have accidents. That could lead to lower premiums.
· Likewise, if you plan to drive more in retirement, tell your agent. They can help you decide if you need any additional coverage for these expanded risks.
· If you have paid off the cost of your car, you might not need to carry physical damage insurance anymore, like collision or comprehensive insurance. However, if you still want to receive compensation for your vehicle damage, you might benefit from keeping coverage. When you buy a new car, you will likely have to buy coverage again, however.
· Should you plan to drive for a business, like a rideshare, to make extra cash, personal auto insurance likely won’t cover you in full. You might need commercial auto insurance or rideshare driver insurance to supplement your basic policy.
· If you buy a leisure vehicle, like an RV or motorcycle policy, you will likely need specific coverage for these vehicles. Classic cars also usually need unique coverage.
· To ensure everyone and every car in your house has appropriate coverage, you might be able to buy a multi-car policy. You can insure numerous vehicles (and numerous drivers) in one place. This might help you save compared to buying separate policies. However, you might be able to tailor coverage within the policy to different vehicles.
· Some auto insurers offer policy discounts for retired people. For example, if you are a member of AARP®, you might qualify for savings.
Let your insurance agent be your guide as you adapt your car insurance. They can help you determine the right changes to your policy, but they can also make sure you pay a fair price.