How to Adjust Car Insurance After Retirement

Article overview

Life changes can impact your car insurance needs. Here's what you’ll learn in this article:

• When to Review: After major life events like retirement, working from home, kids moving out, buying or selling a vehicle or significant financial changes.
• What to Update: Annual mileage, vehicle use, household drivers, vehicles on the policy, liability limits, medical payments and deductibles.
• What to Do Next: Review your declarations page, gather updated details (drivers, vehicles, mileage) and consult your AAA Insurance agent to ensure your coverage fits your needs and explore potential discounts.

Car insurance is one of those bills that tend to stay on autopay. But the reality is major life changes, like retirement, kids leaving the household, adding new vehicles or shifting how much you drive, can all be signs it’s time to revisit your policy.

Something that was set up years ago for a different stage of life may not fit your needs now. Here’s how to adjust your car insurance for life changes.

What does it mean to adjust coverage?

Adjusting your car insurance coverage means updating your policy so it reflects how you actually drive today, as well as details of who’s in your household, what vehicles you own and how much financial protection you want if you cause an accident or your car is damaged.

Adjustments to your insurance can also include increasing coverage in some areas (such as liability limits) while reducing coverage in others (such as mileage or deductibles), based on your current needs and budget.

Common adjustments include:

• Updating your annual mileage and how each vehicle is used (commuting vs. pleasure use)
• Adding or removing drivers (for example, a teen driver added or an adult child moved out)
• Adding or removing vehicles, or insuring specialty vehicles (e.g., RVs) with the right type of policy
• Revisiting liability limits and medical payments coverage
• Changing comprehensive/collision deductibles to balance premium vs. out-of-pocket costs
• Checking for discounts you may now qualify for

Changing your daily driving needs

Stopping a daily commute can reduce your annual mileage and, in turn, your premium. Those who work from home or are hitting retirement age may see a drop in daily driving mileage. Lower mileage or older cars may be an opportunity to see if you can reduce your comprehensive or collision coverage needs and premiums.

You may not have as many drivers in the household anymore. Adult children who were on your insurance while living at home may still be listed years after moving out. And a vehicle you used to use as your daily driver may now rarely leave the driveway, changing both how it’s used and how much coverage it needs.

As you reduce your mileage in retirement, you’ll likely see a reduction in premiums as well when you report your vehicle usage changes. While it’s probably not a big number, if you’re on a fixed income, saving those dollars may matter.

Adding or removing vehicles

Life changes may also mean your vehicles change. You may be selling a car to buy a used car for light use, an RV for retirement travel, or an ATV for off-roading.

To add or remove a car from your policy, you’ll need to follow the insurer's guidelines. For example, some states require documentation proving that plates have been surrendered before removing the vehicle from the policy.

For RVs, off-road vehicles or golf carts, the process may be different. Standard auto and homeowners’ policies don’t always apply to specialty vehicles.

• RVs: Driveable RVs are treated as motor vehicles, so most states require you to carry minimum liability coverage, and lenders may mandate full coverage. Towable RVs generally don’t require a separate insurance policy, but you may consider one to protect the trailer itself and your belongings.  

• Golf carts: Some locations and insurers allow a golf cart to be added to a current homeowners or car insurance policy as an endorsement, but you may choose to buy its own coverage.

• ATVs: On-road ATV coverage is often similar to motorcycle insurance, but in some states, insurance for ATVs driving on private land or off-road may not be mandated. However, you may want coverage such as comprehensive and collision to protect the ATV, as well as liability coverage to protect against bodily harm or property damage.

Before buying a new vehicle, consider speaking with a AAA Insurance agent. Requirements vary by state and vehicle, and knowing what’s involved can help you decide if the vehicle and cost are right for you. While speaking with your agent, it’s a good time to ask about specific discounts.

Taking a second look at liability limits, medical payments and deductibles

Life changes may also mean it’s time to revisit your policy to see if your current coverage still meets your needs and budget.

Liability limits

Liability limits set years ago may not reflect what you have at risk today. After decades of saving, home equity and investments, you may have much more to protect than when those limits were first set. In many cases, raising liability limits or adding an umbrella policy may be a fit for providing additional coverage beyond what a standard auto policy includes.

Medical payments

Medical payments coverage helps pay for medical bills after an accident, regardless of who’s at fault. But how much you need depends on what your health insurance covers, including your deductible and out-of-pocket maximums. That calculation changes over a lifetime, through employer plans or marketplace coverage to retirement and Medicare, so it’s worth checking whether the amount on your policy still makes sense.

Deductibles

A higher deductible lowers your premium and may work for those who have accessible cash on hand or are comfortable with taking on more out-of-pocket risk. But if you’re on a fixed income, a high deductible could be more than you can afford at the worst possible time. Run the numbers to ensure you have a balance between a manageable premium and a deductible you could realistically pay after a claim.

Bringing your coverage in line with your life

As your life changes, a quick check-in when your driving habits, vehicles, or finances shift can help keep your coverage and costs aligned with where you are now.