Nothing is the same as what it was six months ago, so why would your auto insurance be any different?
The United States has somewhere around 280 million cars, and drivers aren’t using them as much as they used to. More people are staying home and traveling less this summer out of fear of COVID-19. So how might auto insurance change, and what you should talk to your agent about?
How Auto Insurance Will Change
Here’s what we’ve seen so far, both in terms of actual policy changes as well as changes in people’s behavior, that will most likely impact how auto insurers determine rates and penalties.
1. Premiums will decrease because fewer people are driving.
More people are working from home, which means fewer people are driving to work during the workweek. As a result, auto insurance providers have adapted their fees to meet this new demand of stay-at-home consumers. These changes have included, but aren’t limited to, rebate checks mailed to customers and reductions in future premium payments.
How extensive are these discounts? Progressive personal auto customers were credited 20% of their premiums for the months of April and May. Allstate and MetLife customers received a 15% credit in April and May.
2. Insurers are giving grace periods for people who can’t make their payments.
Recognizing that many customers are struggling in this economy, insurers set up special payment plans and implemented other measures designed to help policy holders. Allstate, for instance, allowed people to request a special payment plan in which they could delay payments for 60 days. Erie Insurance offered flexible payment options for its customers upon request. Nationwide also deferred payment deadlines and waived some late fees.
While some of those programs already expired, many insurers may continue to offer some type of forbearance or delayed payment programs. We recommend you talk to your insurer about the options that are available to you. Even if you don’t need them now, it’s good to know what your company offers in case you experience an unexpected hardship.
3. You could see increased penalties for speeding or bad driving.
Because fewer drivers are on the road, some people have taken the opportunity to increase their reckless driving, clocking in at 100 miles-per-hour or more. The Governors Highway Safety Association found increases in reckless driving in several states. In New York City, for instance, the Association found that the city’s automated speed cameras issued 24,765 tickets on March 27–nearly double the rate issued daily only a month before. Here in North Carolina, fatal car crashes are up 2.3% through mid-July compared to last year.
Auto insurers have always added penalties for users who were ticketed for driving above the speed limit. North Carolinians, for instance, could pay 30-80 percent more in their premiums as the result of a speeding conviction. We recommend keeping an eye on policy updates, in case insurers start increasing their penalties to try and reduce this reckless behavior. If you’re a driver who sometimes … *ahem* … has a lead foot, then we encourage you to be careful or you could end up paying more than just the cost of a ticket!
4. Insurers are increasing protections for delivery drivers.
Many companies have chosen to deliver goods that customers previously purchased from a brick-and-mortar location. While we applaud businesses trying to keep their employees safer, this also creates a scenario in which those drivers are putting additional miles on their vehicles.
If this describes your current role, then we recommend talking to your insurer and letting them know your situation. You might be able to extend the protection on your personal vehicle.
5. You might be thinking about pay-by-the-mile policies. Here’s why you shouldn’t rush to a decision.
Companies such as Metromile Insurance, which bases its premiums on the amount of miles customers drive, might seem like an attractive alternative to people who pay a flat premium each year. Some drivers might be tempted to switch to companies that offer this type of insurance package, but we’d advise caution for now.
You’re currently working from home, but at some point that’s going to change—and no one really knows when. What if your employer asks you to start coming to the office 1-2 days a week after you changed policies? Suddenly, you’re paying a lot more for an auto insurance policy that you assumed would save you money.
We think drivers need to make decisions that are best for them and their families, but we wouldn’t advise changing policies just because you’re temporarily working from home.
What You Should Do? Have Questions?
We’re happy to talk more about how this pandemic is changing the auto insurance industry and how we’ve adapted to better serve our customers. Call us at (919) 781-6564 to set up an appointment. We’ll answer any questions you have.