For many older Australians, driving represents independence, convenience, and connection to community. But as life changes after retirement, so do driving habits, and with less time spent commuting or running daily errands, some are reconsidering their car insurance. Recently, a friend – Hesper – switched her policy to one that charges based on kilometres driven rather than a traditional annual fixed distance allowance of up to 15,000 km. For older drivers who no longer spend as much time on the road, this raises an important question: is pay-per-kilometre insurance a better option? And beyond choosing the right policy type, what else can older drivers do to save on premiums, and what critical questions should they be asking insurers?

Pay-per-kilometre or “pay as you drive” insurance is gaining traction in Australia, particularly among retirees and those who drive less frequently. Unlike standard policies that charge based on an estimated annual distance, these plans bill you only for the actual kilometres you drive, often tracked by a device in your car or declared odometer readings. For someone like Hesper, who mostly drives for leisure or short trips rather than daily commuting, this tailored approach can mean significant savings. According to industry experts, many insurers offer pay-as-you-drive policies capped at around 10,000 to 15,000 km, a threshold frequently lower than traditional policies because overall risk correlates with distance on the road. This can be particularly cost-effective for older drivers who tend to reduce their driving frequency. However, there are considerations to keep in mind: exceeding the kilometre limit can lead to additional charges or excess fees, and some policies require an upfront installation of tracking devices.

But kilometres aren’t the only factor older drivers should consider in seeking better car insurance deals. There are several practical ways to reduce premiums beyond switching policy types. For instance, increasing the excess – the out-of-pocket amount paid when making a claim – can lower your upfront premium. Choosing Third-Party Property damage over Comprehensive cover might suit some older drivers who have older vehicles or drive less aggressively. Bundling insurance policies or asking about senior-specific discounts is another avenue; some insurers, such as AAMI, or Budget Direct, offer tailored covers or perks for mature drivers. Additionally, paying premiums annually rather than monthly can sometimes save money, although spreading payments could help with budgeting. It’s also worth leveraging drivers’ impeccable records often associated with decades of experience, which insurers typically value and reward with discounts.

Before settling on any policy, asking the right questions is crucial for drivers to ensure the coverage matches their needs and budget. Does the insurer offer a pay-per-kilometre or pay-as-you-drive option, and what are the specific terms around kilometre limits and excess fees? What happens if you exceed your declared kilometres – are there penalties or can you simply top up your allowance at a cost? How flexible is the policy regarding changes in driving habits or health that might affect licensing requirements, given many states require regular medical assessments or even driving tests for seniors over 75? Are there discounts for safe driving history or multi-policy membership with other products like home insurance? Can premiums be paid monthly without additional fees? Understanding the claims process is equally important – can you choose your own repairer? How quickly are claims processed for older drivers, and is there dedicated customer support for seniors?

Driving in later years demands not just attention behind the wheel, but also smart financial decisions off it. Changing to a pay-per-kilometre car insurance policy can offer genuine savings for those whose driving has slowed, like Hesper, but it’s essential to weigh the benefits alongside potential drawbacks such as excess charges or device installation. Older drivers should also consider adjusting excesses, exploring senior-specific discounts, and regularly comparing insurance offers to ensure they’re not paying over the odds. By asking detailed questions about kilometre tracking, policy flexibility, discounts, and claims service, they ensure the coverage aligns with their lifestyle and driving patterns. In a market evolving to meet diverse driver needs, informed choices can help make car insurance more affordable and tailored – so that older Australians can continue to enjoy the freedom of the road without unnecessary financial strain.