How to Assess Insurance Needs for a Senior

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ByMiranda Marquit
ByMiranda Marquit

Updated: May 22, 2024

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Getting older is never easy. And as the child or grandchild of an aging loved one, it’s also not easy to figure out how to assess insurance needs and help your senior family member make the right decisions.

One of the biggest issues is how to handle car insurance and driving. Fatal crash rates per mile traveled begin to increase at age 75 and rise sharply when a driver reaches age 80, according to AAA, due mainly to an increased risk of injury and complications.

With this in mind, here are some of the things to think about as you assess car insurance needs for seniors.

Is the Senior Still Driving?

The first issue is whether the senior is still driving on a regular basis. This can be a difficult situation if you and your other family members feel as though the senior shouldn’t be driving.

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Rate of crashes per 100 million miles driven in relation to age

Image source: AAA Foundation

"This is a very personal decision that should be made after speaking to a doctor and other loved ones, says Earl Jones, an insurance agent with Farmers Insurance in Sunnyvale, Calif.

“ Yet, if they are still living their best lives on the road and can protect themselves and others, it might be OK to have them keep driving. ” - Earl Jones

One way to address this issue is to raise the liability limits on the policy’s coverage. So, if the senior’s liability coverage was $100,000 before, you might want to raise it to something higher. If the senior causes an accident and property is damaged or people are injured, that liability coverage is important. Any physical or property damage that isn’t covered by insurance could threaten your senior’s assets if the other party decides to sue.

If your senior is still driving, Jones says, it’s possible to still receive some discounts, depending on the situation. He says that some insurers will offer about 10 percent off if the senior takes a state-approved defensive driving course, and it’s also possible to save by bundling with other policies, including homeowners insurance and/or an umbrella policy.

When should a senior stop driving?

While it might provide some peace of mind to raise the liability limits on the insurance policy and allow the senior to keep driving, it might not always be the best choice. In fact, at some point, you might end up needing to get the senior off the road.

In some states, it’s possible to report a senior in a way that requires them to take a driving assessment. If they fail the driving test, their license is revoked and they can no longer drive. It’s hard to take steps to remove a person’s independence like this, but it might be necessary in the long run. If the senior is increasingly putting herself and others at risk, it might be time to force the issue.

Consider Adding Umbrella Insurance

For a senior who is living on retirement income, an automobile accident that is their fault can be a problem. They could be sued and put their assets at risk. Umbrella insurance is a form of liability insurance specifically designed to protect the assets of the insured.

According to Jones, it’s common for umbrella policies to require that your auto insurance liability limits are at least:

  • $250,000 bodily injury per person

  • $500,000 bodily injury per accident

  • $100,000 for property damage

On top of that, says Jones, your senior might also need to make sure that there’s liability coverage of at least $100,000 on the home. The idea is that the umbrella insurance wouldn’t kick in until after the other insurance has paid out up to the applicable limits.

“Check with your insurance company as you consider umbrella insurance,” suggests Jones. “You could qualify for a discount on the umbrella policy if you raise liability limits even higher.”

If you’re concerned about protecting your senior loved one’s assets, an umbrella policy can add an extra layer of protection.

Other types of insurance to consider

While auto insurance for seniors might be the most pressing need, don’t forget about other types of insurance. Jones points out that it might make sense to review the home insurance policy to ensure that there is proper coverage.

“Make sure the home insurance coverage is current and aligns with current market replacement costs,” Jones says.

“You would be amazed at how many homes are under-insured and their policies don’t reflect updates and increases in value to the home over the years.” - Earl Jones

Additionally, it’s a good idea to review life insurance policies. A term policy might have expired, or the premiums on a whole life insurance policy might not have been paid. Double-check the situation to make sure the policy is adequate to meet financial planning needs, such as covering estate taxes and making sure that funeral and burial costs are taken care of.

As Jones points out, some of these policies can be discounted if bundled with one company, making it a little more affordable to get the coverage needed by the senior.

Bottom line

Many of us don’t like the idea of sitting down with a parent, grandparent, or other relative or friend to review their finances, especially when it comes to insurance. However, without the right insurance coverage, there’s a chance that your loved one could cause an accident and wind up without adequate coverage to protect their assets.

Take a look at senior insurance policies and see where they stand, and then make adjustments as necessary — and don’t forget to shop around for the best insurance rates in order to get the best coverage for the situation.

About Miranda Marquit

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Miranda Marquit is an author and contributor for MoneyGeek.