A Basic Guide to Car Insurance During COVD-19
The Coronavirus Pandemic has changed the world. People are sheltering in place. They are working from home and finding new forms of -in-home entertainment. Collecting unemployment and worried about putting food on the table. They are driving less and deferring car payments whenever possible. American’s lives are changing, and every area of life has become expendable, including owning a vehicle and maintaining car insurance.
However, businesses are answering the call for help. Car insurance companies, among other companies, are making accommodations for people to get by until the government lifts Coronavirus restrictions, and people are back to work.
Read on to learn what you need to know about COVID-19 and your car insurance.
Have You Heard About the Insurance Rebates Related to Coronavirus?
Insurance companies understand that people are driving much less these days. With many businesses still closed to the public, over 20% fewer cars are on the road. As a result, there are fewer opportunities for accidents leading to insurance claims.
To accommodate this change in driving habits, insurers are offering rebates to their clients. Many insurance companies are issuing paper checks to clients. American Family Insurance is sending each customer a $50 rebate check for premium reductions.
Traveler’s Insurance reduced all monthly premium payments by 10%.
Allstate is reducing monthly premium payments by at least 15% during the shelter-in-place pandemic.
Each state has different regulations regarding car insurance and rebates or extended grace periods. It is best to check with your insurance company and our state to determine if you are entitled to a rebate, if one has been instituted already, or if you should receive additional time to pay your premiums.
What Are Other Options Available to Lower My Premium?
Insurance premiums are calculated based on several issues. The calculations are based on:
- Your Risk Factor (age, accident history, miles driven per day)
- The Cost to Replace or Repair Your Vehicle
- Your deductible (your portion of the risk)
The one area with the most flexibility is your deductible. You cannot change your risk factor, and no one is asking you to sell your car in favor of an older or cheaper car. However, you can change how much risk you are willing to absorb.
Therefore, one of the most effective ways to lower your premium is to raise your deductible. If you have a $500 deductible, increase it to $1,000. Raising your deductible will have a significant effect on your premium.
You may also choose to remove additions to your coverage. Each “discount” you add to your coverage, like the safe driver discount or the accident forgiveness program, adds money to your premium. You may opt-out of those additional benefits to lower your premium to a more affordable amount. Check with your insurance company to make sure there are no penalties to remove the benefits and reinstate them at another time.
Should I cancel My Car Insurance While I Am Not Driving?
It is highly recommended to keep some level of car insurance during this time. Like every insurance product, a gap in coverage can make it more difficult to get coverage when you need it. It can also raise your premiums exponentially when you try to reinsure. Furthermore, if there is a hit and run when your car is parked, you will not have any coverage to repair or replace it.
Keep in mind, you will not be allowed to put your car on the road, under any circumstances, without insurance coverage. Therefore, find other ways to reduce the out-of-pocket expenses that do not put you or your car at high risk.
To learn more about How COVID-19 affects your car insurance, Subscribe to Your Money Magic and our insurance experts will be happy to answer any questions you may have.