Accident Law News

Reducing Car Insurance Rates while Sheltering at Home during COVID-19

Car Insurance

Almost every state is practicing social distancing or on full-scale lock-downs thanks to Coronavirus spreading across the world like a wildfire. Due to the lock-downs and worry over catching the virus, people have stopped driving and have started spending more time at home.

As people are forced to leave their jobs and remain in their houses, companies and landlords have begun offering discounts, deferments, and lower rates in order to ease burdens for those who have lost income.

Due to the stress of decreased income, people are looking into getting lower insurance rates by acquiring pay as you go auto insurance or negotiating with their insurance agency for cheaper premiums because they are not driving their cars a lot, if at all.

Will commuting less get you a lower car insurance rate?

The answer to this question varies based on your insurance company. With all the uncertainty surrounding this pandemic, people are in a state of panic because they are worried about an economic recession. This panic is pushing everyone into a frenzy to the point that they are demanding expenses be cut down, and some insurance companies are complying.

Though some agencies already consider annual mileage for their rates, other agencies that normally do not are deciding to cut down rates during this pandemic.

No one expects COVID-19 to last forever. Eventually, things are going to calm down, and the morning rush hours will re-commence so some insurance companies will not offer lower rates just because of temporarily decreased mileage usage. 

The uproar of insurance agencies that have offered lowered rates, refunds, or discounts, did not begin until after they were called out by groups, like the Consumer Federation of America.

Should I cancel my car insurance and re-purchase once the lock-down ends?

Due to the fact that car insurance covers incidents outside of actively operating your vehicle, it is not wise to simply cancel your car insurance. Your insurance covers accidents that occur even when your car is parked in place.

For example, if you live where parking is shared by neighbors, your car can be damaged if someone hits it while parked in the lot. If you still have active insurance, you do not have to worry about how you are going to fix it. All you have to do is follow the normal steps you take after a car accident.

Additionally, all of the states in the United States have financial responsibility laws that require individuals to be able to manage all of the financial responsibilities associated with assets. This means that car owners have to keep up car insurance on any vehicle they are operating, even if they rarely operate it.

Allowing your car insurance to lapse can even lead to a registration suspension and fines. So unless you absolutely cannot afford to keep your car insurance policy, you should keep it active.

Just as the regulations for tenant evictions have eased some, there is more leniency with car insurance regulations in circumstances where you cannot afford it. All you have to do is call your insurance provider to see what the available options are.

Should you keep optional car insurance coverage too?

The same thinking applies to optional coverage types like collision and comprehensive coverage. You can drop these types of coverage to lower your premium and monthly payments but your car will not be covered in case of theft, vandalism, hail (and other objects that can fall onto it), or natural disasters like fires or floods.

For the sake of protecting your car in these instances and meeting the minimum requirements imposed by lenders if you have a car loan, you should not drop these types of coverage either.

Will changing to “Pay-Per-Mile Insurance” be beneficial?

Pay-per-mile insurance is insurance where you only pay for the miles that you have driven. This is a great option for people who work from home regularly or whose job is in close proximity to their homes. This may seem ideal for those who are currently forced to work at their home during shelter-in-place, but it may not be beneficial because eventually, you will go back into the office.

If you have this type of insurance when the states open back up, you may end up paying more for insurance than you normally would because you will be driving more miles commuting to and from work.

Circumstances vary from person to person, and it will take a bit of research and speaking with your insurance company about their policy options to determine if this route will benefit you financially.

What if I cannot afford my car insurance right now?

The majority of car insurance companies are offering extended grace periods for those who have been released from work because of their employers’ inability to stay in compliance during COVID-19. These grace periods can last up to a month depending on the company.

Aside from the grace periods, insurance companies are also offering different payment options for those who have lost income during this time. To ensure that certain clients are being serviced in regard to their circumstances, these companies are keeping a close eye on the climate of each state and their respective insurance department.

Will I lose any current discounts I have because of COVID-19?

If you are like other parents, you probably take advantage of discounts that are offered for students who are away at school. These discounts knock off certain percentages of a premium for students under 25 years old who go to college roughly 100 miles away from home.

Unfortunately, these discounts may be at risk if you have children that were sent home from college because this discount only applies if they only have access to your car when home on school breaks.

Insurance companies are aware of the circumstances due to the pandemic, so your discount may not be affected. The only way to know for sure though is to call your policy representative and ask.

Ultimately, the biggest thing to recognize is that every company is figuring out how rules and regulations will alter during this pandemic. The best thing to do is to call and ask about any and all concerns you have regarding your policy coverage during this time.

Many people are struggling because of income loss so help is constantly being offered to help combat the hardships brought on by the coronavirus.



Imani Francies writes and researches for the auto insurance comparison site, footer Add