When we are in our fifties, insurance companies love us. We have decades of driving experience behind us, quick reflexes, pretty good eyesight and -- as they see it -- mature judgment. Our accident rates are low, and they make money off us. But then, depending on the insurance company, either in our mid-sixties or seventies, they start bumping up rates rapidly, supposedly because statistics show us being in more accidents and generating higher medical bills.
We cannot argue with their statistics, but we can look at ways we can benefit from every possible discount. We can make some behavioral changes to lower our premiums. Then we can run comparative quotes between insurers each year to be sure we are getting the best balance between cost and coverage.
While maybe it is not the most exciting topic, auto insurance is not something that we should "set it and forget it." Insurance rates regularly drop from our 'expensive twenties' to our 'responsible fifties.' However, from age 60 forward, we need to monitor our existing insurance provider and proactively research to compare how someone else might treat us better.
That does not mean dropping the quality of insurer to get better rates. Ideally, we should stick to one of the top ten insurers, who have good financial ratings. However, we can revisit in detail what coverage we are buying and make adjustments as premiums become less financially attractive due to our age or health.
If your car is registered with your state, whether you drive it much or not, it needs to be insured. The minimum insurance coverage required by each state is different, but usually implies some level of Liability, Personal Injury Protection (PIP or No-Fault) and Uninsured/Underinsured coverages. Many seniors on small, fixed incomes may have to settle for just the minimums, but they are left at risk.
First, the minimum amounts for each coverage are likely to be too low to cover all the damage that can be done, so you could be held responsible for the difference. Also, Collision and Comprehensive coverages are often not required, so you will get nothing for the damage you cause to your car in an accident or rollover, or for damage caused by theft, vandalism, windstorm, fire, hail, etc.
Deductibles matter, too. That is the amount you will have to pay out of pocket before your insurance kicks in. A higher deductible means a lower premium, but how much can you afford to pay out in cash on short notice?
Having adequate auto insurance:
- Protects the investment you made in your car, whether to repair it or replace it in case of accident, incident or theft;
- Protects your other assets and your financial future against lawsuits brought by others whose person or property you may have injured or damaged;
- Protects you against other drivers who are uninsured or underinsured in accidents that are not your fault;
- Provides additional medical coverage where needed; and
- Provides general peace of mind, knowing you are acting within the law and as a responsible driver.
As with anything else we buy, what we are seeking is an easy transaction: getting what we need without having to jump through too many hoops. However, because our auto insurance rates will be going up as we age, we need to understand our policies better and be able to negotiate with our insurance agent to buy what we need (no more, no less) at the very best price.
We start by checking the cost of the policy, the ease of enrollment, what the policy covers, the ease of paying and how responsive the company's customer service is to our needs.
Beyond that, we start looking at what deductibles are available, any additional benefits, ease of access to the company through the website or apps, discounts offered, general customer satisfaction and the company's financial strength.
The 'best' car insurance is a very individual thing; it needs to be the best for you. The ideal place to start your research is online, far from the pressure of an insurance salesperson. It would be better to talk to a company only once you know your options and are prepared with your preferences.
Pick three or four insurance providers you know to have good reputations. Typically, they will be the ones that advertise on TV and in the magazines you read, because they are strong enough to be able to afford it. It is a good idea to check their Better Business Bureau rating to see how they handle complaints. Also check how they rate with A.M. Best, the leading insurance rating agency.(That rating should be at least an A.)
Visit each company's website and learn everything you can. Read reviews on their site and on review sites (but remember that most people write to complain, not to praise). However, that input will help you build a 'feel' about the company.Price is not the only decision-making factor. The company with the lowest price is not always the best choice if the company is difficult to deal with, for example.
Some seniors prefer to choose an insurer that has a local presence, as they like to be able to build a relationship face-to-face with a local agent. That is up to you; some internet-only insurers offer excellent service and can lower pricing by not having the extra costs of real estate and personnel.
Find a list of all possible discounts and identify the ones for which you qualify. Be sure to include them in any online quoting tool you use.
Then, once you are prepared with your information, contact each of the companies that sounds interesting to you, have them quote the exact policy you have decided on, and make an apples-to-apples comparison. (Be sure to ask if they have included all available discounts in your final quote. There is no reason to leave money on the table.)
Once you have gone through a quoting cycle once, keep your notes, so it is easier to do the next time. If anything in your life has changed since last time that might lower your premium, such as fewer miles driven, be sure to add that to your notes.
At each renewal, your existing insurer will automatically add anything that raises your premium (such as your age). You should proactively work to keep the premiums down by checking with other insurers each year, even if you decide to stay with the same company, especially if that company will give you a 'loyal customer' discount.
Everyone faces the same concerns when buying auto insurance, regardless of age. However, seniors are sensitive to two other areas: age-friendliness and health-related value.
Age friendliness means how convenient and easy a service is in adapting to your changing needs as you get older. In the case of auto insurance, this includes having clean, intuitive websites, multiple options for communicating with the company and solid support from its customer service representatives.
It also means how 'not-unfriendly' the companies' policies are to people who are progressing through their sixties and seventies. At what age do they start bumping up premiums? What if you have no accidents or tickets? Once you join an age group, will your premiums go up regardless? The answer varies by insurance company, but insurance rates are partly determined by the entire group you belong to, and not by your driving record. So the question is, by how much will they go up?
Health-related value reflects how the value of a service might change as a person’s health declines. In the case of auto insurance, the primary factor is the physical condition of the driver, which affects reaction time, vision and concentration. Side-effects from medications play a role as well. Data shows an increase in intersection-related accidents and fatalities as a senior's abilities degrade significantly.
As the human body becomes frailer, there is a point at which the danger you pose to others is more of a concern than just the rise in premiums. While your insurance carrier should be able to shift its coverage in step with you, you should also be willing to agree that there is a time to stop driving.
Auto insurance policy premiums will vary greatly from person to person, based on factors that insurers will weigh using their undisclosed algorithm. Typically, two factors govern that premium: underwriting and rating.
When you apply for insurance, the company puts your application through underwriting, which considers you and your driving habits. Some factors are your driving record, how much you drive, if you commute, what neighborhood the car is usually parked in overnight, the make and model of your car, your credit rating, your gender, age and prior insurance coverage.
Next, the company classifies you into one of three basic risk categories (Preferred, Standard and Non-Standard) based on its own rating system. Preferred drivers have clean driving records over the past three to five years and are considered low risk. Standard drivers drive family-type cars, have reasonably clean driving records and are considered a moderate risk. High-risk Non-Standard drivers have tickets or accidents, a poor premium payment history and a reckless or drunk-driving history.
A quote will then be affected by the discounts you are qualified to receive. They could include
mature rider, safe driver, low mileage, non-commuter, pay in full, pay on time, automatic bill-pay, homeowner, married (in states where that rate reduction is allowed), Anti-theft, anti-lock brakes, completion of safety courses, multi-car or car-home bundling, association memberships, retired military, switching from another carrier and diminishing deductibles.
As we look at an insurance policy, we first look at the cost of the policy, how easy it is to enroll, what the policy covers, ease of paying and the quality of the customer's customer support.
Cost: Obviously, the auto insurance policy you choose must be affordable. It should also reflect the risk, or lack of risk, you are willing to take regarding physical and financial loss. Each insurer weighs your personal and behavioral factors differently, which makes it so important to obtain multiple quotes each year, even if it just confirms you are with the right insurer. How and when the company increases premiums simply because your age increases matters, and so do the discounts the company makes available to you. Premiums are quoted for 6-month periods; check to be sure the premium will be guaranteed for a full year.
Ease of enrollment: How many hoops a company puts you through before you can enroll is a good indication of what they will be like to work with in case of an incident. Their website should be clear and complete. (Some companies will make you call for quotes, but the site should give you all other general information.) The company should offer multiple forms of access: at least online and phone, and maybe through a local agent.
Basic coverage: An auto insurance policy is a combination of several individual coverages, each protecting you against a different type of loss. The six basic coverage areas (Bodily Injury Liability, Property Damage Liability, Personal Injury Protection, Uninsured/Underinsured Motorist Protection, Collision and Comprehensive) will be available from all credible insurers. However, your state may not require that you have all six. You also want to be sure you are getting the exact 'levels' of coverage you want, and not assume that all Bodily Injury Liability coverage, for example, is the same. The details are important.
Add-on coverage: Any of the 'basic' coverages not required by your state can be considered add-ons.Companies also offer other coverages:
- Medical Expense Benefit (for excess medical costs from injuries);
- Rental Insurance (while your car is being repaired);
- Gap Insurance (if you owe more on your car than the depreciated value your insurer will pay if it is totaled);
- Roadside Assistance (for towing);
- and others.
Be certain you really need these. They can add unnecessary cost to your premium when they may already be covered by your Medicare, credit cards or association memberships.
Payment options: If an insurer has accepted you as a customer, the company should make it easy for you to pay your premiums, whether you prepay a year in advance or make monthly payments. You should be able to pay with a credit card, debit card, as an electronic funds transfer (EFT) from a bank or savings account, or by paper check. If you work on a tight budget and pay your insurance monthly, the company should be willing to change your billing date to coincide with when you get monthly income checks.
Customer support: The first gauge in assessing customer support is how many means of communication the company offers and the hours of availability. However, it should also include how effective its representatives are, how transparent and supportive they are when an incident occurs and how they handle claims processing. Companies should recognize that the quality of customer service is especially important to seniors, particularly as we age and decline in health.
Seniors often seek ways to lower their premiums, especially as premiums start rising with our advancing years. One way is to drive less; some insurers offer a low-mileage discount of 10 percent for driving under 5,000 or 7,500 miles. If you are a safe driver, another way is to accept the insurance company's plug-in monitoring device in your car that records mileage and driving habits: your speed, braking tendencies and acceleration.
Take a mature driver course, which could reduce premiums by 5-15 percent. Change the primary driver on the policy if that person is no longer driving. If you are buying a car, consider rearview cameras, lane drift, collision warning and parking assist options. Find out what associations get discounts from the insurer and join the association if it makes financial sense.
Discounts vary by insurer, but you should be able to accumulate several. Companies will usually combine them, but will cap the savings at about 25 percent.
One last consideration: An insurer’s claims-processing procedure is difficult to assess before you actually need it. However, you want to know it will not add even more stress at a time when you have had an accident. One tool is to look online to a neutral organization such as JD Power and it's U.S. Auto Insurance Claims Satisfaction Study.