The effects of the coronavirus pandemic are reaching nearly every corner of our lives. When it comes to your car, it will change the way you buy, finance, and insure it. In the short term, you may be worried about even being able to pay your car insurance premium. You may be considering what changes you should make to your policy to save money and ensure continuing coverage.
Fortunately, most insurers are offering payment relief, halting insurance cancellations, and providing online claims processing. Many are providing partial premium refunds because many consumers aren’t driving very much due to the COVID-19 outbreak. A large percentage of Americans are working from home and following strict stay-at-home orders.
“This crisis is pervasive. Given an unprecedented decline in driving, customers will receive a Shelter-in-Place Payback of more than $600 million over the next two months,” said Allstate’s President and Chief Executive Officer Tom Wilson.
In this article, we’ll strive to answer many of the questions we’re hearing from auto insurance customers.
What Usually Happens if I Can't Pay My Insurance Premium?
In normal times, failure to pay insurance premiums on time will result in the policy being canceled. Most cancellation policies have a grace period of up to seven days before the coverage is terminated. Once a policy is canceled, it’s often more expensive once it’s reinstated (if they offer to reinstate it at all).
However, insurance companies and their regulators realize these aren’t normal times. Insurers are quickly rolling out new programs and procedures to assist customers who may have suffered a job loss, reduced hours, or medical issues. Each insurance company is responding differently, and the procedures for getting help can shift from day to day. It’s important to reach out to your company as soon as you have an inkling you many need some assistance.
Are Insurance Companies Offering Grace Periods Because of Coronavirus?
Insurance companies are extending grace periods and halting cancellations for customers who can’t make their payments due to the coronavirus pandemic. In some cases, the leniency is being ordered by state insurance regulators. Most of the companies included in our car insurance comparison guide have announced case-by-case programs to assist consumers.
Geico, for example, is “...pausing cancellation of coverage due to non-payment and policy expiration, effectively immediately. This pause will remain in effect through April 30, 2020.”
Allstate is helping customers who contact them with a 60-day payment deferral with no penalty.
With some companies, any payment deferral or forbearance is done on a case-by-case basis. Before you miss a payment, you should contact your auto insurance company or agent online or by phone to find out whether you can take advantage of a COVID-19 payment deferment. If you miss a payment without talking to the company first, it can be harder to take advantage of their hardship program.
Can I Switch to a Cheaper Insurance Company Because of Coronavirus?
You can’t switch to another insurer and be automatically assured of cheaper premiums. You can, however, take this pause in your normal activities as an opportunity to research your insurance options and make changes to your coverages, insurance company, or deductibles.
Though most people should occasionally reassess whether their current insurer and coverage levels are the best one for their needs, few do. It’s one of those tasks that many just never get around to doing. Using this involuntary down time as a chance to do so can save you a significant amount of money.
Our auto insurance hub is a good place to start your research. In addition to finding the cheapest insurance companies in the marketplace, you can also explore when different types of coverages protect you and assess the amount of insurance you need.
How Do I Get an Insurance Quote Right Now?
It’s not a good idea to sit across the desk from an insurance agent to discuss policy options right now. Fortunately, there are several socially distanced ways of getting car insurance quotes. You can call an agent or insurance company, contact insurers through their individual websites, or visit a website that can find you multiple quotes from one online application.
It’s important to provide complete and honest information on your insurance application, as insurers will verify the information on the application when determining your premium and fitness to be insured.
You should provide information about the distances you drive in normal times, not during the pandemic, so you can get an accurate quote that won’t have to be reassessed once things start to get back to normal. Be sure to consider whether you’ll be taking mass transit, or driving your own car to maintain social distancing when your employer reopens.
Can I Get an Insurance Discount Because I'm Not Driving to Work Every Day?
Yes, you can potentially save a bit of money because you’re not commuting back and forth to work, traveling to weekend activities, and spending evenings out. Most major insurance companies have announced programs of premium refunds that will be automatically applied to your account.
In some cases, you’ll have to call your insurance agent or company, however, to see if they can dial back your declared mileage until the crisis is over. Some companies may be willing to give you a price break, while others will see the event as temporary and be unwilling to reduce your rates.
“American Family Insurance is doing this out of responsibility to our customers. They are driving less and experiencing fewer claims. Because of these results, they deserve premium relief,” said Telisa Yancy, American Family chief operating officer.
Here’s the premium relief many of America’s major insurance companies are offering to their customers:
- Companies that comprise AAA auto insurance will receive a 20% premium refund. The timeframes and refund mechanisms vary by company.
- Allstate is refunding 15% of most customers April and May premiums.
- Amica Mutual Insurance plans to refund 20% of April and May premiums.
- American Family Insurance customers will receive a one-time refund of $50 per vehicle.
- Auto-Owners Insurance is giving policyholders a 15% premium credit for April and May.
- Chubb is providing a 35% credit for April and May premiums, plus potential additional discounts as the situation warrants.
- Country Financial is giving a 15% refund for two months of premiums.
- Erie Insurance is seeking approval to reduce premiums in the 12 states where it writes policies.
- Farmers Insurance is reducing customer’s April car insurance premiums by 25%.
- Geico has announced a 15% credit on semi-annual premiums.
- Hanover Insurance is providing 15% refunds for April and May premiums.
- The Hartford Insurance is crediting their customers with 15% of their April and May premiums.
- Liberty Mutual is planning to provide a 15% rebate on two months of premiums, based on premium amounts as of April 7.
- Metlife is crediting their auto insurance customers for 15% of their April and May premiums.
- Mercury Insurance refunding 15% of April and May premiums.
- Nationwide will provide customers with a $50 premium refund.
- Progressive Insurance will provide a 20% credit for April and May premiums.
- Safeco auto insurance customers will receive a 15% credit for two months of premiums
- State Farm will be providing an average of a 25% policy credit.
- Travelers is providing a 15% credit on their April and May premiums.
- USAA has announced a 20% credit on two months of premiums.
Some may be offering additional discounts as the pandemic plays out over the coming months.
The actions of America’s insurers aren’t completely altruistic. They’re trying to stay ahead of pressure from consumer advocates, state insurance regulators, and competitors.
The Consumer Federation of America and the Center for Economic Justice have drafted a joint letter that was sent to state insurance commissioners. It states that the number of accidents will dramatically decline as drivers are on the road less, and insurers should return overly expensive premiums to policyholders who are sheltering in place and driving very little. It states, “If a policy was rated based on commuting to work, then anyone who is staying home and only driving to the market for supplies is paying a premium that is now excessive.”
“Windfall profits for auto insurers and excessive auto insurance premiums should not be another harm visited upon consumers from COVID-19,” said Robert Hunter, director of insurance for the Consumer Federation of America.
Of course, the number of miles driven is only one factor used in setting car insurance premiums.
Insurance customers who allow their vehicles to be tracked and pay for insurance by the mile should see a direct reduction in the size of the premium they pay. Customers of Metromile Insurance, for example, will see a direct effect on their premiums, without waiting for a traditional insurance company to refund a fraction of the money they’ve already paid.
On the other side of the coin are car owners who are skipping mass transit and driving their vehicles to essential jobs. They’re likely putting far more miles on their vehicles than they originally told their insurers. They should call their insurance agent to avoid problems with their coverage if there is an incident.
In addition to their premium refund program, Allstate and several other insurers are extending protections to policyholders using their personal cars for commercial purposes, including the delivery of food, medicine, or other goods. They recognize many more businesses are having to deliver goods to stay afloat, and social service organizations are enlisting more volunteers.
Should I Cancel My Coverage During This Time?
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 can still be stolen or damaged by storms, and you’ll want insurance coverage to help you pay for repairs or replace your vehicle. Insurance companies don’t like to see lapses in coverage, so the higher rates you pay when the crisis is over may offset any savings you gain.
In many states, you’re required to carry insurance on your car even if you’re not driving it. Having insurance coverage is a requirement to register the car with most state DMVs, and most lenders and leasing companies require customers to maintain a certain level of car insurance.
Will Coronavirus Affect My Ability to File an Insurance Claim?
The coronavirus should not affect your ability to file an insurance claim and get your vehicle repaired, though it may cause some delays. Most insurance companies now offer online claims portals, where you upload documents, photos of the vehicle, and any property damage. An adjuster may ask you to shoot a video of specific vehicle damage, so they can appraise the damage remotely.
In many areas where there are shelter-in-place orders, auto repair shops are exempt. Their hours and staffing may be reduced, however.
What Should I Do if I’m in a Collision or Stopped by the Police?
Even with far fewer cars on the road than normal, collisions are still going to happen. You’ll want to perform all of the duties you’re required to do by law, while trying to put as much social distance between yourself and the other driver as possible.
One way to share information while maintaining social distancing is by placing your documents — driver’s licenses, registration, and insurance cards — on the hood of your car, then letting the other party photograph them with their smartphone, then repeating the process with their documents. You’ll want to comprehensively photograph the scene, as the police may not respond and you’ll want documentation to provide to your insurance company. Be sure to get the other party’s email address, as much of the claims process may happen over email or through an online claims portal.
In some places, police agencies are taking reports over the phone or online, rather than responding to incidents.
If you are stopped by police, you want to do exactly what they ask you to do. Different agencies may have varying approaches to vehicle stops, and officers will be doing everything they can to ensure both your safety and their own. Many jurisdictions have announced relaxed enforcement of expired tags, both to limit officer exposure and because agencies that issue renewals may be closed.
More Car Insurance Tools From U.S. News & World Report
At U.S. News and World Report, we help consumers with life’s most important financial decisions. When it comes to cars, we provide new car rankings and reviews, plus a library of articles covering everything from how to buy a car to deciding whether to buy or lease.
Finding the right car insurance is an essential part of owning or leasing a vehicle. We’ll not only show you the types of insurance coverage you’ll need, but also the best insurance companies in the country and insurance discounts that can save you money.
More Coronavirus Resources From U.S. News & World Report
- Coronavirus and Cars: What you need to know about car buying today
- Coronavirus and Car Insurance: Should You Make Changes to Your Auto Insurance Policy?
- Coronavirus and Car Deals: Can You Get a Good Deal on a Purchase or Lease?
It is the mission of U.S. News & World Report to help you through life’s major decisions and events. We’ve created a centralized hub of coronavirus information to help you and your family weather this storm. We have resources ranging from how to avoid being infected to understanding your rights as a traveler with canceled vacation plans. Our education team has resources to guide you through changing financial aid policies and how to move your education online.
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