With many states on lockdown and people across the country avoiding travel and gatherings, countless car owners are driving a lot less. If your driving habits have been significantly impacted, you may be wondering if you should make any changes to your car insurance policy. Here’s a look at how COVID-19 could affect your car insurance decisions.
If I’m Not Commuting to Work, Can I Get Lower Car Insurance Rates?
This depends on your auto insurance company. Some insurance companies factor in annual mileage when setting car insurance rates, while others don’t.
Since the COVID-19 outbreak, the Center for Disease Control and Prevention has advised employers to encourage employees to work remotely, if possible. But if COVID-19 will affect your commute for only a short, albeit uncertain, period of time, you’re unlikely to get lower rates or a mileage discount.
“While the mileage discount is something considered in the sale of the original policy and/or renewal, it is very difficult to effectively compute and price for such a short period of time,” says Ariana Gibson of Clearcover, an auto insurance company.
In recent days, there has been a call for car insurance companies to lower or refund premiums due to COVID-19-related lockdowns. The Consumer Federation of California Education Foundation filed a petition with the California Insurance Commissioner requesting car insurance companies refund or credit premiums to drivers because fewer accidents will mean bigger profits for auto insurers.
Additionally, the Consumer Federation of America and the Center for Economic Justice has called on state insurance departments to urge car insurers to offer premium relief for policyholders.
Even if you’re not driving as much, car insurance is essential
If I’m Not Going to Be Driving for a Few Weeks, Can I Cancel My Car Insurance?
If you plan to drive your car at all, even if it’s rarely, you should not cancel your car insurance. There are “financial responsibility” laws in all 50 states, which means that if you drive the vehicle you have to show that you’re able to pay others if you cause a car accident. Most people satisfy financial responsibility laws by purchasing car insurance.
If you get caught driving without car insurance, you could face fines, license and registration suspension, and even jail time.
In addition, many states require car owners to have auto insurance if the vehicle is registered.
Bottom line: If you plan to drive at all, don’t cancel your car insurance.
Even if you’re not driving, auto insurance can be essential. Things can happen to your car while it’s sitting in your driveway. For example, comprehensive insurance covers car theft and damage from problems such as fire, floods, vandalism and tornados—problems that can happen whether you’re driving or not.
Can I Temporarily Suspend My Car Insurance?
Depending on your state, some car insurance companies allow customers to temporarily “suspend” car insurance. This generally means temporarily removing coverage.
This option is usually reserved for customers who may be traveling for more than a month (such as snowbirds who go to Florida) or leaving on military deployment. In other words, the car will not be in use at all. Your insurance company may not allow you to temporarily suspend car insurance if you’re staying home.
“We are advising that customers maintain their car insurance policies in case something happens to their vehicle, even while parked at home,” says Michael Klein, Executive Vice President and President of Personal Insurance at Travelers.
Gibson of Clearcover agrees, noting that springtime often brings hail storms and winds that knock down tree branches.
Should I Switch to Pay-Per-Mile Insurance?
If you’re temporarily working from home due to the COVID-19 outbreak, it may not make much sense to switch to a pay-per-mile plan. When your commute resumes, you could end up paying more than with a traditional car insurance policy.
However, pay-per-mile insurance can be a good option for those who won’t drive much for the long term. With a typical pay-per-mile insurance policy, you pay a base rate plus a per-mile rate. Your miles are tracked using a device that plugs into your car’s onboard diagnostics port.
Some companies, like Metromile, specialize in pay-per-mile pricing. Some large auto insurance companies, like Milewise from Allstate and SmartMiles from Nationwide, offer pay-per-mile programs. Pay-per-mile car insurance may not be available in your state.
Should I Drop Optional Coverage Types to Save Money?
Dropping optional coverage types such as collision and comprehensive insurance could lower your premium. But keep in mind, you won’t have important coverage for problems like car theft, hail, fire, floods, vandalism, falling objects (like tree branches) and collisions with animals.
If you have a car loan or lease, your lender or leasing company will likely require you to carry collision and comprehensive insurance anyway.
If you want to save money on car insurance, call your insurance agent and ask for a review of the possible car insurance discounts, or increase the amount of your deductibles.
Given that customers are likely to be experiencing different situations, specific policy questions on discounts would be best handled individually.
Michael Klein, Executive Vice President and President of Personal Insurance at Travelers
What If I Can’t Afford My Car Insurance Premium?
If COVID-19 has affected your income and you can’t afford your car insurance premium, give your agent or insurer a call as soon as possible. Many car insurance companies are offering extended grace periods and other payment options.
Car insurance companies are also monitoring states’ departments of insurance for guidance. For example, the Insurance Commissioner in California recently requested that insurance companies allow a 60-day premium grace period due to COVID-19.
Do I Lose a Discount Now That My College Student Is Home?
Many car insurance companies offer a “student away at school” discount. Generally, to qualify for this discount, your student has to be under a certain age (usually 25) and go to school a certain distance away from home (usually 100 miles). They must have access to your car only when they’re home on school breaks.
But due to COVID-19, many schools have sent their students home.
Now that your student is no longer away at school, you may wonder if your discount still applies. It’s a good idea to call your insurance company and let them know of the change.
“Given that customers are likely to be experiencing different situations, specific policy questions on discounts would be best handled individually. We recommend that customers get in touch with their independent agent, or contact us to discuss their circumstances,” says Klein of Travelers.
Even if your student came home early because of COVID-19, your discount could still apply, depending on the insurance company.
Gibson says Clearcover plans to apply the discount through the end of the school year.
Do I Need to Change My Coverage If I Start Work Doing Deliveries?
If you’re looking to earn some extra cash and use your personal car to make deliveries for takeout meals or groceries, you may need a commercial auto policy. That’s because food delivery is a business use of a vehicle, not personal use.
If you don’t have the right coverage in place and get into a car accident, your claim could be denied, leaving you on the hook for car repair or medical bills.
Some delivery employers offer commercial auto insurance to drivers, but it might kick in only after the coverage in your personal policy is used up. There might also be a gap in coverage between your personal auto policy and an employer’s commercial policy. For example, you might not have coverage when you’re driving to the restaurant or store to pick up an order.
Before you start making deliveries, call your car insurance agent to find out what the right insurance will be for your delivery situation.
What If I Need to File a Claim During the COVID-19 Outbreak?
If you get into an accident or your car is damaged by a problem like a fire, flood or vandalism, you may need to file an insurance claim. Many car insurance companies are limiting in-person interactions and recommend filing claims online, through their mobile apps or by calling customer service.
Claims are still being processed during the pandemic.