Should Your Car Insurance Provider Offer You A COVID Discount?
Here’s a question that’s been driving a good deal of interest as of late: If you’re spending less time on the road, doesn’t it make sense that you should be spending less on car insurance?
Less driving means less payouts for accidents, which has led to skyrocketing profits for auto insurers. Analysis by the Center for Economic Justice and the Consumer Federation of America showed crashes down 31% since the beginning of the pandemic, when compared to the same time last year.
Case in point: Geico reported that its pre-tax earnings tripled during the second and third quarters of 2020, and Progressive enjoyed an 82% increase in net income. And that’s just to name a few. In class action lawsuits filed in Nevada in February, plaintiffs contend that 10 of the leading auto insurers have maintained unreasonably high premiums during the COVID-19 pandemic, when restrictions on personal and professional activity have caused overall driving to significantly drop.
Some insurers have slowed down their accumulation of profits by offering customer discounts, ranging from 15%-25% reductions on premiums to small, one-time only refunds. If your insurance company isn’t offering up a deduction or a refund, consider some of the following tips that might help you keep more money in your wallet, instead of lining the pockets of your auto insurer.
Put A Hold On Your Car Insurance
If your car is permanently in park – meaning you’ve completely stopped driving during the pandemic – you might be able to put your insurance on hold. But going down this road requires some research on your part to determine if pausing your insurance will result in a suspended registration or fines from the DMV. If you’re making car payments to a bank, suspending your car insurance may not be possible.
Call And Ask
Being proactive could be profitable. According to the U.S. Public Interest Research Group Education Fund, “Regardless of how much each company profited, the majority of insurers didn’t give back more than half of one month’s premium.” And many of the companies didn’t issue refunds or reduce rates unless customers called and asked for specific action to be taken. Contact your insurance agent and ask for a review of your premium, taking into consideration how your driving habits have changed during the pandemic.
Drop Optional Coverage
Remove any “extras” from your insurance policy such as the rental car option. Chances are if you’re driving your own car less, you’ll need a rental car less. Limiting the extras on your policy can save you a few dollars, but you’ll still need to meet your state’s requirements for minimum liability coverage.
Increase Your Deductible
It’s simple math- if you’re driving less, the risk of a claim is lower. Now might be a good time to raise your deductible, which is the amount you pay out of pocket on a claim. Keep in mind, however, that while a higher deductible can save you money on monthly premiums, you could find yourself paying out more cash if you’re in a crash.
Switch Insurance Providers
Don’t put the brakes on shopping around for a company that offers pandemic discounts. You could be wasting more than $1,000 annually if you haven’t comparison-shopped at all over the past six months.