How COVID-19 is Affecting Auto Insurance

My Insurance Premium is a Burden on my Budget. What can I do?

If your auto insurance bill is a burden on your budget, as a result of the COVID-19 pandemic, you can contact your insurance agent to increase your deductible or reduce your coverage limits for the time being. 

How can I Lower my Monthly Payments?

Increase Your Deductible

Your deductible is the amount of money you agree to pay out of pocket before your insurance will cover expenses. Increasing this amount will typically result in a lower monthly premium.

Reduce Your Liability Coverage Limits

Lowering your liability coverage limits can reduce your monthly premium slightly. For example, if you lower your bodily injury coverage from 50K to 25K you’ll see a decrease in your monthly premium. However, if an accident does occur, you’ll be responsible for any expenses beyond your new limit. 

Switch to a Usage-based Plan

If you’re driving fewer miles than usual, you may want to consider a usage-based car insurance plan. While traditional car insurance is priced using factors like your age, credit score and claims history, usage-based insurance relies on driving data to determine how much you pay for coverage. Insurance companies gather this data through an app on your phone which records details about your driving. This plan would work best if you are planning to stay on a usage-based plan for the long term, especially if switching to this type of plan requires you to switch insurance companies. 

Should I Cancel My Insurance Coverage During the COVID-19 Pandemic?

It’s critical that you don’t cancel your coverage during this time. You’ll likely still need to drive your car to the grocery store and medical appointments. Your car may be stolen or damaged by storms, and you’ll want insurance coverage to help you pay for repairs or replace your vehicle. Additionally, when insurance companies see gaps in insurance coverage, they often increase their rates.  Furthermore, in many states including Utah, you are required to carry insurance on your vehicle even if you’re not driving it. 

Canceling your car insurance, even if it’s only for a limited period of time, can have several negative impacts:

  • You won’t be covered for any losses or accidents that may occur.
  • Most states, including Utah, legally require car insurance before you can drive and you may face fees to reinstate your insurance plan.
  • A gap in coverage can mean higher premiums when you restart your coverage. 
  • There may be cancellation fees or unexpected costs. 
  • Dropping your insurance means you will see a 7-12 percent increase in rates for the same coverage when you return. 

Can I Switch to a Cheaper Insurance Company?

You can research options for discounts and reductions with your own insurance company and ask for quotes from other companies. By switching companies, you will not be guaranteed a cheaper rate. Make sure to do your research before you switch insurance companies. However, make sure that you’re willing to stay with that company after the COVID-19 pandemic. 

Can I get an Insurance Discount because I’m Not Driving to Work Every Day?

You can potentially save on your premium by calling your insurance agent to report your current driving mileage. Some companies may be willing to give you a price break during the quarantine while others seeing the event as a temporary situation will not reduce your rate. 

Why Insurance Rates are Unlikely to Decline Overall 

Lower premiums across the board of insurance companies is unlikely. Auto insurance rates are based on multiple years worth of data which leads to gradual premium changes. So even though insurance companies may receive fewer insurance claims, this will not affect premium rates overall.

Will Auto Insurance Claims be Affected by COVID-19?

With social distancing measures in place across the country, insurers are making sure their employees and customers stay safe by keeping the claims process digital. This means lawyers and insurance agents will no longer visit with you face to face. This puts more of the documentation and reporting responsibilities into your hands. You’ll need to make sure you have detailed photos of your accident and a police report along with any other documents you can gather such as witness statements.  

Changes Insurance Companies have made to Help Their Clients During COVID-19

Allstate has announced that it will allow customers to defer two consecutive premium payments without penalty. The company also is pausing insurance cancellations for non-paying customers. Geico is similarly pausing cancellations at least through the end of April and Progressive and Travelers insurance are doing so through mid-May. 

  • Allstate is refunding 15% of April and May premiums.
  • American Family Insurance customers will receive a one-time refund of $50 per vehicle.
  • Farmers Insurance is reducing customer’s April car insurance premiums by 25%.
  • Geico has announced a 15% credit on semi-annual premiums.
  • Nationwide will provide customers with a $50 premium refund.
  • Progressive Insurance will provide a 20% credit for April and May premiums.
  • State farm will be providing an average of 25% policy credit.
  • Travelers Insurance is providing a 15% credit on their April and May premiums.
  • USAA has announced a 20% credit on two months worth of premiums.

Have you been in an auto accident? Call 801-683-1948 for a free legal consultation, a free 30-minute massage, or a no-cost medical exam.