Retirement opens a door for many to travel the world, spend more time with family and friends, or to simply take in ones surroundings and enjoy the simplicity of life. Because of the nature of car insurance, what most people dont realize is that a change in lifestyle can alter the life of your car insurance.
A car insurance policy is specific to the owner. It is based off a number of different factors including age, household structure, demographics and actual amount of time spent in the car. When these factors take on a permanent change then it might be time to revisit the original policy.
It is normal to think that after retirement you will spend a lot more time in your car traveling and doing all the things you havent had a chance to do due to being employed. But, is this really the case? On average, a commuter can put up to 12,000 miles per year on his or her car. Without a commute, your car will likely see a drop of 7,000 to 8,000 miles per year, which could mean a serious deduction in your coverage. If you are planning on putting a lot of miles on your car due to relocating after retirement, it would be wise to look into the average premium cost for the area you will be relocating too.
A common goal for retirement is to have your household, including children, financially stable before you leave the work force. Once this has happened, your car insurance policy should be revisited for numerous reasons. For one, having a child move out of the house may result in a lower premium. If your children have not yet permanently moved out of the house, then they should be included on your policy. Lastly, a death or divorce of spouse should be a reason to go back and look at your current policy.
A key thing to consider is the actual value of your car. According to Mike Barry, vice president at the Insurance Information Institute, dropping collision coverage on an older car may be the fiscally smart action to take.
For a 10-year old, or older, car, it doesn’t make sense to have collision coverage, said Barry. Wrecking a 10-year-old car might cause $4,000 in damage on a car thats worth only $5,000 to $6,000.
As a general rule of thumb, any changes to the life of your vehicle should cause you to revisit your policy and look for change. According to Barry, every driver should review his auto insurance policy once a year, regardless of age or major life changes.