With retirement comes the freedom to live life on your own terms, but it also requires prudent financial planning. According to Forbes Advisor, car insurance premiums increase at 65 because seniors report more accidents and claims.

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There will be further premium increases in the auto insurance industry in 2025. For example, California, the state with the most drivers, will dramatically increase its liability limits at the turn of the year. It is therefore more important than ever for retirees to budget wisely.

With that in mind, GoBankingRates enlisted the expertise of pros to develop strategies for how retirees can get the best car insurance rates through 2025 — Shavon Roman, licensed insurance agent and financial expert at Heal. Plan. Invest. based in Atlanta, and Jacqueline Keer, owner of Keer & Heyer Insurance in Point Pleasant Beach, New Jersey.

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Work with a broker who works with multiple insurance companies

Insurance brokers maintain relationships with multiple insurance companies and can therefore more easily find better rates for their clients than an insurance agent who represents only one insurance agency.

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Most people are overinsured and don’t know why or how to change that, Roman says. She recalls a couple in their mid-sixties who asked her for advice because their car insurance premiums were double what they should have been paying.

“The husband insisted on staying with the company they had worked for for 40 years. He said State Farm had been good to them; they had car accidents and handled the claims really well.”

However, he questioned why his insurance premiums had continued to rise over the years and said he did not understand his policy.

“Why don’t you hire someone to work for you?” Roman said. She referred them to an insurance broker who saved them $1,300 a year on their two cars.

“The policy was exactly the same. The only difference was that the insurance carrier was not a big brand like State Farm or Allstate, but a small company with good ratings and a good claims history.”

Sometimes customers commit to well-known insurance companies that have been around for a long time, but there are also good, smaller, government-regulated companies with good financial ratings, says Roman.

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“Seniors on a fixed income should pay attention to their insurance policy,” Roman said. “It doesn’t matter if it’s $2,000 or $20,000 a month, it’s still a fixed amount of money.”

Bundle house and car

“The best thing to do is to combine your home and car insurance and even take out personal liability insurance,” says Keer.

An exception, says Roman, is in Florida or California, where the car insurance companies there, which previously also offered building and renter’s insurance, have withdrawn from the market.

“In these states, you can get bundled auto insurance by adding additional liability coverage.”

Protect your assets with an umbrella policy

If you’re involved in an accident and your liability is $50,000 but you only have $25,000 of insurance, personal liability insurance will pay the difference so you’re not personally liable, Roman said.

“Liability insurance protects your income and assets by paying out the difference between the claim and your actual insurance amounts. Let’s face it, a small accident can easily mean a six-figure liability, especially now when everything is so expensive; those high coverage amounts don’t exist,” she said.

“If someone gets hurt and sues you and you only have $15,000 per person or $30,000 per accident and the other person sues you for $500,000, you’re going to have to pay that out of pocket,” Keer added.

“That’s why it’s important to take out liability insurance in case a lawsuit is brought and money is awarded.”

Sign up for a defensive driving course

Another way to save money on your car insurance is to take a defensive driving course.

“AARP offers it; it takes six hours; it’s online and you can do it from the comfort of your own home,” Roman said. “I typically see discounts ranging from 5% to 20%, depending on the provider and the state the customer is in.”

Keer said in New Jersey, people can save about 10% on their collision insurance by taking the defensive driving course, but not their entire policy.

“If your policy is $1,000 a year, but your portion of the policy is your collision insurance, say it’s $500 of that $1,000, then you’re only going to save 10% of that $500.”

Consider eliminating the collision if you have an old car

“Retirees tend to keep their cars longer, but if you have a 15-year-old car, the value may not be high enough to justify collision insurance,” Keer said. “If the car isn’t worth much, you’re going to have to spend $1,000 more on the car.”

Save with low mileage car insurance

Most people don’t know that low-mileage insurance exists, Roman says. “It’s simply a discount based on the number of miles you drive each year.”

“Especially if you’re in your early 60s or mid-60s and preparing for retirement or already retired, it’s really important to coordinate your commute mileage with your insurance so you’re not paying the same rate as when you were commuting to work every day,” Roman said.

Keer and Roman both recommend notifying your agent if you no longer commute to work.

Other ways seniors can save on car insurance

• Paperless discount: Keer has found that people can save up to 10% by going paperless.

• Choose an annual policy: Keer and Roman recommend annual policies because you don’t have to pay a premium increase until the policy renews. With a six-month policy, your premiums can increase twice in one year.

• Combine savings: Keer helped a customer save $100 on her annual premium by combining a higher deductible, paperless billing, paying her policy in full, and installing an app on her phone to monitor and reward her good driving behavior.

• Full payment: If you pay your bill in full, you’ll save $5 on each installment, Keer said.

• Sign up for automatic payment: You can save $20 to $30 on your bill by having your reward electronically deducted from your checking account or credit card.

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This article originally appeared on GOBankingRates.com: Senior Savings: The Best Car Insurance Rates for Retirees in 2025