Car Insurance and COVID-19: How You're Impacted as a Policyholder

If you're a driver, it helps to track the significant changes affecting your car insurance during COVID-19 movement restrictions and business shutdowns. After all, you still need auto insurance protection even if you've been driving less during the pandemic. The outbreak caused a 40% to 60% drop in total miles driven across various states, according to a report. Having fewer vehicles on the road has impacted driving behavior, risk, and claim frequency rates, prompting the U.S. insurance industry to react. Some of the changes that major carriers recently implemented have provided opportunities to optimize coverage and save on car insurance costs. So, how does COVID-19 impact the auto insurance industry? Read on to find out.

Dangerous Driving Keeps Insurance Premiums High

There are fewer vehicles on the roads today than during pre-coronavirus periods, translating to fewer accidents and lower claim frequency rates. However, empty roads encourage speeding and dangerous driving, which generally increases auto accident risk and claim severity. Therefore, fewer cars on U.S. roads today doesn't automatically result in lower auto insurance premiums.

A Drop in New Vehicles Sales

New car sales in 2020 decreased by about 40% compared to 2019. This statistic implies that automobile insurers may be settling fewer expensive vehicle repair or replacement claims during the COVID-19 period. However, to meet the financial pressure the pandemic has had on the healthcare system, auto accident treatment costs will likely increase. Consequently, insurance claims will probably be more expensive, likely keeping your premiums high in the meantime.

Car Insurance and COVID-19 Relief

Generally, major U.S. insurers offered various financial incentives to support their customers amid the coronavirus pandemic. As a result, many policyholders received premium rebates or givebacks at some point in 2020. You may also keep an eye out for competitive discounts that most insurers are currently offering.

Attractive Insurance Pricing Plans  

Mileage is one of the factors that determine your auto insurance costs. If you're driving less during the COVID-19 pandemic, you'll likely be interested in the pay-per-mile pricing structure that some carriers recently introduced. With such a plan, you may pay a lower base rate per month if you keep your total mileage within a specified maximum.

How You Can Take Advantage

Generally, auto insurance rates may remain high due to high medical costs and expensive claims in the COVID-19 era. However, insurers are competing for customers and offering different incentives to retain policyholders. You can take advantage of that and lower your premiums in ways like:

1. Get Several Quotes

You may save on auto insurance costs by obtaining and comparing multiple quotes. Each carrier has a formula to determine your rate, such as price optimization, but you can protect yourself with reasonably priced coverage by shopping around.

2. Inquire About Discounts.

Speaking of car insurance and COVID-19 incentives, you'll want to take advantage of any discounts your carrier may be offering related to the pandemic. Also, contact your agent or provider to find out if you're eligible for lower premiums after marriage, turning 26, or any accomplishment that makes you less risky in the eyes of your insurer.

3. Optimize Your Coverage

Audit your auto insurance requirements, increase coverage as needed, and do away with policies you no longer need. For instance, if your car remains parked in the garage during the pandemic, you may want to expand your comprehensive coverage against any additional risks. Be sure to make the most of these changes affecting car insurance during COVID-19 times.   Do you have additional questions about your car insurance?  If so, then contact the experts at John E. Peakes Insurance Agency.  Our dedicated team is eager to assist you with all your car coverage needs today.