COVID-19 and how it affects Car Insurance Premiums

This crisis that has affected the entire world has had an impact on almost every part of society. You may be surprised of the impact on Covid-19 has had on insurance rates.

Back in 2020 and most of 2021…

When the pandemic first hit the country, stay at home mandates began to increase state by state.

Insurance companies recognized that with the State Mandates to stay at home, there was a decline in the number of drivers on the road. With a decline in drivers, the amount of accidents and claims were significantly lower.

Many Insurance companies started offering lower prices, or generating refunds and credits for drivers who were not driving as frequently.

Most car insurance companies are no longer offering pandemic related rebates or discounts. However, there is a chance that if you qualified at the time, perhaps your car insurance company will work with you to help you receive what was owed to you. It doesn’t hurt to ask!

If your Insurance provider is not offering these discounts/refunds, you may be able to shop for another company that is. Here at A Plus Insurance we have multiple trusted carriers and we can do the shopping for you.

Why Am I Seeing Car Insurance Rates Increase in 2023?

Unfortunately, we are still in a pandemic, and auto rates that seemed to have plummeted in 2020, are on a steady incline.

Why Is This?

Stay at home mandates have mostly been lifted throughout the country and overall, driving behavior is returning to pre-pandemic levels.

This means that accidents are on the rise, and insurance companies are once again receiving a multitude of claims.

As if this isn’t enough…there is a shortage of car parts and labor, meaning the cost to repair vehicles and replace parts has also skyrocketed.

There are plenty of non pandemic reasons that insurance rates go up on an individual basis as well.

How to save money on your Insurance policy during Covid-19

There are several ways you can save additional money on your Insurance premium, even if your insurance provider is not offering refunds.

First, we recommend you do not cancel your insurance policy at this time if you can afford it. This will only lead to an increased price when you go to purchase a new policy later down the road.

By law, all drivers are required to carry at least the State Minimum Liability Limits to make them legal on the road.

If your policy contains extra coverages that may not be needed at this time, like Comprehensive and Collision, you may want to consider altering your coverages.

If you are financing a vehicle, you will still need to carry full coverage to comply with your lender. But, if you have an older vehicle with full coverage that you are just not driving lately, you should consider altering your coverages for cheaper prices. Certain coverage options may be redundant for you.

Aside from asking your company for discounts, and altering coverages during COVID-19, if you are still not paying what you think you should be, you can always shop different companies.

With the prices changing with each company, this makes it a great time to check other Insurance providers for a more competitive rate. Don’t be afraid to save money on your Auto Insurance by switching companies.

COVID-19 What to do if you can’t afford your payment

If you are having a hard time making your monthly payments on time, communication is the best policy. A lot of Insurance companies recognize the struggle, and have payment plans available.

We do not know you are struggling unless you reach out. So Instead of having your car Insurance policy cancelled for non payment and sent to collections, see if your company can offer an extended due date.

Since COVID-19, most companies are willing to work with customers to adjust due dates and make payment arrangements without cancelling.

The worst thing you could do is just let your insurance policy go without any notice, or request to cancel.

The policy may continue to charge until the Insurance company cancels the policy resulting in you owing more money.

COVID-19 and the Cost of Auto Insurance 2024 UPDATED

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The COVID-19 pandemic has had a significant impact on various aspects of life, including the auto insurance industry. Initially, as lockdowns and stay-at-home orders were implemented globally to curb the spread of the virus, there was a noticeable decrease in driving. This reduction in driving led to fewer accidents and insurance claims, which in turn affected the cost of auto insurance in several ways. Here are some of the key impacts of COVID-19 on auto insurance costs:

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1. Premium Refunds and Discounts

During the early stages of the pandemic in 2020, many auto insurers recognized the reduction in driving and, consequently, the decreased risk of accidents. As a result, several insurers provided refunds, credits, or discounts to their policyholders. This was a direct benefit to consumers, reflecting the lower usage of vehicles and the reduced risk to insurers.

2. Changes in Policyholder Behavior

The pandemic also led to changes in policyholder behavior. More people started working from home, which meant their commuting patterns changed, potentially reducing the need for comprehensive coverage or allowing them to qualify for low-mileage discounts. Some policyholders sought to reduce their premiums by adjusting their coverage levels or deductibles, given the decreased use of their vehicles.

3. Shifts in Insurance Shopping and Customer Expectations

The economic impact of the pandemic made consumers more price-sensitive, leading to increased shopping for auto insurance to find better rates or discounts. Additionally, there was a heightened expectation for digital services, as in-person interactions were minimized. Insurers had to adapt by enhancing their online and mobile platforms for sales, customer service, and claims processing.

4. Long-term Implications on Premiums

While the initial response to the pandemic might have led to lower premiums or refunds, the long-term implications on auto insurance costs are complex. Factors such as the global supply chain disruptions, which affected the cost and availability of car parts, and the increase in used car prices, could lead to higher repair costs and thus potentially higher premiums. Moreover, as driving levels normalize or even increase, the frequency of claims could rise, impacting rates.

5. Usage-based and Telematics Programs

The pandemic accelerated interest in usage-based insurance (UBI) and telematics programs, which base premiums on actual driving behavior and mileage. With more people working from home and driving less, these programs became more appealing for those seeking to reduce their insurance costs.

6. Risk Evaluation and Underwriting

Insurers have had to reconsider their risk evaluation and underwriting processes in light of the pandemic. Changes in driving behavior, shifts in vehicle usage patterns, and economic factors are all being taken into account to accurately price policies.

7. Increased Claims Severity

While the frequency of claims decreased due to less driving, some insurers reported an increase in the severity of claims. This paradox can be attributed to several factors, including higher speeds on less congested roads leading to more severe accidents.

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The COVID-19 pandemic has brought both short-term changes and potential long-term shifts to the auto insurance industry. While the immediate response involved refunds and discounts due to decreased driving, the evolving situation requires insurers and policyholders to adapt to new realities, including embracing digital tools, considering usage-based insurance, and navigating economic uncertainties that could affect insurance costs. As the world continues to adjust to post-pandemic norms, the auto insurance industry will likely see further changes in how policies are priced and how insurance products are designed to meet the needs of drivers.

Last Updated on March 6, 2024 by Marlon Moss