Wasting money on auto insurance?

By Peter Lewis

Older Americans are spending hundreds of millions more on car insurance than they need to.

A majority of states compel insurers to offer age-based discounts to people who take a driving-improvement class. Typically, the laws apply to drivers 55 and older -- an estimated 60 million Americans.

Though the break varies among states and by individual carriers, a 10% savings is not uncommon. Based on the typical annual premium, that would translate to roughly $100 a year per person in savings.

A class usually costs $16 to $20, depending on whether you already belong to the sponsoring organization, such as AARP, AAA or the National Safety Council. You can also take a course online.

Discounts in your state

Proponents such as AARP say the discounts promote safety by giving seniors an incentive to take courses tailored to their needs. Insurers generally oppose mandatory age-based discounts. They maintain that discounts should be discretionary, said Bob Passmore of the Property Casualty Insurers Association of America, an industry trade group.

More often than not, AARP has prevailed.

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AARP counts 35 states plus the District of Columbia that require carriers to offer age-based discounts to drivers who complete safe-driving courses. At least two additional states, Arizona and Indiana, have laws that make discounts discretionary, according to the National Association of Insurance Commissioners.

The discounts typically top out at 10% and are good for two or three years, after which they are renewable if the class is retaken.

To learn whether you are eligible for a discount:

• Look up the law in your state using the tool in the right-hand column of this page.

• Ask your insurance company.

• Check with your state insurance commissioner.

• Contact your local AAA or AARP chapter.

Who takes it? Almost no one

You'd think the financial incentive would be particularly strong for seniors, many of whom live on fixed incomes. You'd be wrong.

If we assumed the average annual premium for car insurance were only $750 and that the discount were only 5%, and that only half the seniors living in the states where such discounts are mandatory took advantage, that savings would add up to hundreds of billions of dollars.

Yet six years ago, the last time AARP estimated the annual savings by people who had completed its program, the amount totaled only $45 million.

A spokeswoman for AARP, which established the program in 1979, said only 1% of its 39 million members take the course each year. The National Safety Council and AAA could say how many have taken their driving safety courses. But there's no reason to believe the participation rate is much different.

Possible explanations include:

• Seniors are still working and don't believe the savings are worth spending a day in class for.

• They're unaware of the courses.

• They have too much pride to take a class.

Teaching an old driver new tricks

Officially, the class takes eight hours. But in practice, it can be shorter.

One class, led recently in Seattle by a AAA instructor, lasted less than six hours. Most attendees were drivers 65 or older who had been through the course previously and were returning to renew their discounts.

Continued: 'Freewayphobia'

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