You Retired and Stopped Commuting. How Do You Lower Car Insurance Costs?

There are many things to celebrate when you reach the milestone of retirement, and one underappreciated blessing is not having to commute anymore. For those who drive to work, this means considerably less wear on your car from sitting in traffic day in and day out.

And does that mean you can cut your insurance bills? Well, yes, cutting your daily commute can be leveraged to trim your premium. But the difference probably isn't as much as you're hoping for — and there are more meaningful changes you can make as you retire that will net better savings.

If you're in your 50s or 60s, the good news is you're already likely paying some of the lowest rates you'll ever pay. Drivers in this age range are considered some of the least risky to insure by providers. Once you hit 75, premiums start climbing, as older drivers are considered higher risk.

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That means decreasing your annual mileage is unlikely to make that much of a difference to what you're paying. But it also means you don't need to make any dramatic changes to your coverage just yet if you're not ready.

If you want to see a meaningful drop in rates, here are some changes you can make and how much you can expect to save from each one. Make the changes now or keep them in your back pocket for when your car insurance rates start surging in your 70s.

Save $80 for low annual mileage

Cutting your commute could be enough to put you in the "low mileage" club.

Insurers vary on what they consider low mileage and how much they discount premiums for those who drive less. But, on average, you can expect your policy to drop by about 3%. Based on the current national average car insurance rate of $2,671 per year for full coverage, that translates to about $80.

To get those savings, call up your insurance provider and ask how much of a discount you'd qualify for and what you need to do to get the change in your driving habits reflected on your policy.

If your insurance is up for renewal soon anyway, use this opportunity to shop around for a new policy and make sure to report your new annual mileage now that you're no longer commuting.

To find out how much you'd save by switching car insurance now that your annual mileage is lower, use our car insurance comparison tool, powered by Bankrate:

Consider switching to a pay-per-mile policy

If cutting out your commute means you'll rarely be driving at all, you might be a good candidate for pay-per-mile car insurance. These policies usually charge a low base premium and then tack on additional premiums at a fixed rate per mile.

Since rates vary by provider and the amount you pay will change each month based on how much you drive, it's hard to estimate how much you'd save (or if you'd save at all) by switching to pay-per-mile car insurance. But, if you know you'll be relying on other modes of transport like walking, biking or using public transport for most of your daily needs, it's worth getting quotes.

One important caveat here is that the insurance company might require you to install a device in your car or download an app that will track your mileage. If they do, read through the privacy policies thoroughly to see what other data the company might be gathering about you, how it will use it and who else it will be sharing that data with.

The savings may not be worth the risk of a data breach or the deluge of marketing calls and emails you end up dealing with by handing over this kind of personal information.

Save $2,100 by getting rid of a car

If you're in a two-car household, consider getting rid of one car. Now that you're no longer commuting every day, it may be easier for you and your spouse to get by on just one vehicle, and the savings can definitely make it worth your while.

Assuming you have a multi-car policy – which usually comes with a roughly 20% discount on insuring the second car – you could save an average of $2,100 per year by ditching one of your cars. That's based on the same $2,671 average calculated by Bankrate.

You should be able to log in to your account and see a breakdown of exactly how much each car on your policy costs to insure. If that info isn't available in the online portal, call your insurer to ask how much each car on your policy costs.

If you are getting rid of a car, you can save even more by getting rid of whichever car model costs the most to insure. If you're choosing between a Subaru and a Tesla, for example, ditching the Tesla will net you the most savings.

That doesn't mean you have to give up your dream car to save money, though. If you have a luxury or classic car you love, keep it (just remember to have the best insurance for luxury or exotic cars). Going from two cars to one on your insurance will still result in notable savings, even if the car you keep is the more expensive of the two.

Save $1,400 by downgrading one car to minimum coverage

If you're not ready to completely give up a car in retirement, you can still save thousands by opting to downgrade coverage on one of your vehicles to the minimum required by your state — if you're willing to accept the risks and possible higher costs in case of incidents.

A minimum coverage policy is about $1,800 cheaper than full coverage, according to Bankrate. If you're on a multi-car policy, getting that 20% discount would translate to about $1,400 in savings by dropping to minimum coverage on just one of your cars.

If you go this route, make sure you're dropping coverage on your least valuable car. Minimum coverage typically means you're dropping collision and comprehensive coverage, so you're on the hook for repair bills if you're at fault in an accident. It's better to be on the hook for the car that will be the cheapest to repair.

Another option, if you're not ready to completely drop full coverage, is to simply lower the coverage amounts. If you're driving less, you're also less likely to be involved in a serious accident. So, you could drop the coverage amounts on your policy without exposing yourself to much more risk. (If, however, you're swapping commutes for long road trips, this would be risky.)

Be wary of decreasing your liability coverage, though. Liability coverage also shields your assets in the event the other driver sues you after an accident. As a retiree, that means your hard-earned retirement savings could be on the line if your policy doesn't provide enough coverage to pay for the lawsuit.

Save $800 by raising your deductible

Raising your deductible is another good way to find real savings on your car insurance. A full coverage policy with deductibles of $100 for comprehensive and $500 for collision insurance costs $3,041 on average.

If you raised those deductibles to $1,500 each, your premium would drop to an average of $2,205. That's about $800 saved without even giving up coverage.

As your risk decreases, you can basically treat your car insurance as a "worst-case-scenario" tool. That is, max out your deductible knowing that you're only going to file a claim on your collision or comprehensive coverage if the damage is severe enough that you're pretty sure your car will get totaled.

Retirement is a great time to save on car insurance

While cutting out your commute might not impact your car insurance rates as much as you thought, there are lots of opportunities to slash your premiums now that you're retired.

Many of the strategies above can also bring other savings, too. Driving less means you'll save on gas, and if you get rid of a car, you'll save even more. You can toss all those savings into a one-year CD and treat yourself to a vacation or shopping spree every year, paid for by your monthly savings from paying less for car insurance, gas and car maintenance.

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