Consult our guide to managing auto insurance during these uncertain times.
Lockdown orders due to the coronavirus pandemic have led to dramatic mileage decreases for many drivers. What does this mean for auto insurance and consumers' coverage needs? Insurance companies are navigating the tricky questions raised by the social and economic disruption brought about by COVID-19. The companies' decisions and policy changes during this unprecedented period could have an impact on policyholders' pockets.
In our guide to car insurance and coronavirus, we’ll explore the implications of this worldwide pandemic on the car insurance industry and what it means for you as an insurance customer. We will cover common questions related to maintaining coverage and saving money, along with details on the financial assistance and payment forgiveness insurance companies are offering.
Below are common insurance questions you may have if you’re having trouble making premium payments, trying to find ways to save some money, or considering a change to your coverage. If you have additional questions, feel free to submit them here.
Call your insurance company to discuss payment options. Many insurers are offering flexible payment plans, extending grace periods, waiving late fees, and pausing cancellations through specified dates. See more information about this below for specific company responses.
Your state may have also issued leniency guidelines for insurance companies to follow, which would require insurers to offer premium relief up to a certain length of time. Contact your state’s department of insurance to see if they are requiring insurance providers to extend payment dates and grace periods, waive fees, or pause policy cancellations. Insurance companies will need to follow each state’s leniency regulations during the pandemic.
Whatever you do, don’t cancel your policy and go without insurance. This will result in a lapse, which will increase your rate in the future. Try to maintain — at the very least — liability insurance, abiding by your state’s minimum required amount.
No. While we understand car insurance may seem unnecessary in the face of financial difficulties and lockdown orders across the nation, you will risk higher premiums when you end your lapse and get auto insurance again.
In addition, some states are extending deadlines for car registration and driver's license renewals. Check with your state's Department of Motor Vehicles (DMV) for updated protocols and grace periods.
While “suspending” or “freezing” coverage isn't usually an option, many insurance companies are temporarily suspending policy cancellations from now through a specified date (this differs by company).
Your insurance company may allow you to opt for car storage insurance. This interim coverage drops liability and collision coverages, leaving you with a comprehensive-only insurance policy that will cover your parked or garaged car while it’s not in use. You’ll need to follow protocols set by your state; without liability insurance, which is mandated, you may need to cancel the vehicle’s registration. Continue reading to explore other ways to save money while maintaining your coverage.
Having liability-only auto insurance is the best way to save as much as 50% on your premium. While you should always carry at least the state-required minimum amount, raising your liability limits can be a good idea — as long as it’s affordable — and can be done for just a little extra premium. However, having comprehensive and collision coverages can make your rate increase by more than double.
If your vehicle is worth less than $4,000, it may be worth dropping comprehensive and collision coverages to save money. But you may not be able to do this if your vehicle is financed or leased, as having and maintaining physical coverage is usually a requirement of the loan.
It’s also a good idea to reassess your coverage needs altogether, and get rid of add-ons like rental car reimbursement and emergency roadside assistance.
While it sounds like a good idea, the reality is that unless you live in California, you shouldn't expect a drastic change in your premium if you lower your mileage. According to our data, you’ll save — at most — a few dollars per month if your annual mileage falls at or below 7,500 miles.
However, drivers in California can save approximately 30% on their insurance premiums if their annual mileage drops to below 7,500 miles or fewer.
Whether you’re working from home or looking for work, you’re likely finding yourself at home for days on end while your car goes undriven for extended lengths of time. Car insurance based on telematics or usage may appear to be an attractive option for these situations.
While it may initially be cheaper, keep in mind that it’s usually a better option for those who are not driving much for the longterm. Once you resume your daily commute and other activities, these telematics and pay-per-mile insurance options may actually become more expensive than a traditional policy. However, they are definitely worth looking into if you’re looking to tighten your costs and lower your premium.
Do your research before enrolling in usage-based insurance, as it differs from company-to-company and may not be available in your state. Learn more about telematics insurance options.
If you’ll be using your personal vehicle to work for a delivery service such as DoorDash, Grubhub, or UberEats, keep in mind your personal auto policy never covers any sort of business or commercial use. While these delivery services do offer their own insurance coverage for drivers, it tends to be extremely limited and usually meant to be used as a secondary source of insurance. This is why these services require their drivers to carry their own insurance.
Delivery drivers have two options to obtain insurance coverage while working:
Some companies (like Allstate) are offering automatic coverage for delivery drivers using their personal cars for business purposes. Learn more below.
The “student away from home” is a common discount, and is a cost-cutting measure for parents whose children have limited access to the insured car because they are away at school more than 100 miles from the residence. However, many college students have been sent home due to public health concerns surrounding COVID-19, potentially disqualifying them from this discount.
If you’re wondering if this discount will be voided as a result, contact your insurance company and make them aware of the change. Depending on your insurer, your discount could still apply.
The claims process should largely not be affected during this time. Most companies allow claims to be filed online, via mobile app, or by phone. The process will be handled by claims adjusters and other administrative staff as it is done normally.
Being between jobs shouldn’t affect your premium by very much. Nationally, unemployed drivers paid approximately 1% more for car insurance than employed drivers. This translates to an average of just more than $20 a year in extra costs.
Each insurance company is handling the financial impact of coronavirus on policyholders differently.
Some insurers are offering more leniency and premium relief than others. Below is a list of some of popular insurance providers and their individual accommodations to customers experiencing financial setbacks as a result of the coronavirus crisis.
It is still too early to ascertain the impact of COVID-19 on car insurance rates, even as Americans sharply reduce how often they’re on the road. While auto insurance companies have reported fewer accidents and claims attributed to state lockdown orders — which means insurers get to keep all of that unclaimed premium as more profit — it is difficult to say definitively that they will pass on savings in the form of coronavirus car insurance discounts.
Insurance companies use multiple years' worth of data to set premiums, and this makes any changes to rates very gradual. Unless this substantial decrease in accidents and claims persists for a lengthy period of time, it is unlikely that auto insurance rates will permanently decrease as a side effect of the pandemic.
