COVID-19 and Car Insurance

Lockdown orders due to the coronavirus pandemic have led to dramatic mileage decreases for many drivers. What does this mean for auto insurance and consumers' coverage needs? Car insurance companies are navigating the tricky questions raised by the social and economic disruption brought about by COVID-19. The companies' decisions and policy changes during this unprecedented period could have an impact on policyholders' pockets. 

In our guide to car insurance and coronavirus, we’ll explore the implications of this worldwide pandemic on the car insurance industry and what it means for you as an insurance customer. We will cover common questions related to maintaining coverage and saving money, along with details on the financial assistance and payment forgiveness insurance companies are offering. 

For homeowners-specific information, see our guide to COVID-19 and Homeowners Insurance.

 

How to handle auto insurance during coronavirus — table of contents: 

1. Insurance during COVID-19: FAQs
2. Discounts and premium relief plans by insurance company
3. How will coronavirus affect insurance rates?

 

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Frequently asked questions: car insurance and COVID-19

Below are common insurance questions you may have if you’re having trouble making premium payments, trying to find ways to save some money, or considering a change to your coverage. If you have additional questions, feel free to submit them here.

 

I can no longer afford my car insurance premium. What are my options?

Call your insurance company to discuss payment options. Many insurers are offering flexible payment plans, extending grace periods, waiving late fees, and pausing cancellations through specified dates. See more information about this below for specific company responses.

Your state may have also issued leniency guidelines for insurance companies to follow, which would require insurers to offer premium relief up to a certain length of time. Contact your state’s department of insurance to see if they are requiring insurance providers to extend payment dates and grace periods, waive fees, or pause policy cancellations. Insurance companies will need to follow each state’s leniency regulations during the pandemic.

Whatever you do, don’t cancel your policy and go without insurance. This will result in a lapse, which will increase your rate in the future. Try to maintain — at the very least — liability insurance, abiding by your state’s minimum required amount.

 

Should I cancel my auto insurance during the COVID-19 shutdown if I’m not driving?

No. While we understand car insurance may seem unnecessary in the face of financial difficulties and lockdown orders across the nation, you will risk higher premiums when you end your lapse and get auto insurance again.

In addition, some states are extending deadlines for car registration and driver's license renewals. Check with your state's Department of Motor Vehicles (DMV) for updated protocols and grace periods.

 

Can auto insurance be temporarily suspended?

While “suspending” or “freezing” coverage isn't usually an option, many insurance companies are temporarily suspending policy cancellations from now through a specified date (this differs by company).

Your insurance company may allow you to opt for car storage insurance. This interim coverage drops liability and collision coverages, leaving you with a comprehensive-only insurance policy that will cover your parked or garaged car while it’s not in use. You’ll need to follow protocols set by your state; without liability insurance, which is mandated, you may need to cancel the vehicle’s registration. Continue reading to explore other ways to save money while maintaining your coverage.

 

What coverages can I drop to save money?

Having liability-only auto insurance is the best way to save as much as 50% on your premium. While you should always carry at least the state-required minimum amount, raising your liability limits can be a good idea — as long as it’s affordable — and can be done for just a little extra premium. However, having comprehensive and collision coverages can make your rate increase by more than double.

If your vehicle is worth less than $4,000, it may be worth dropping comprehensive and collision coverages to save money. But you may not be able to do this if your vehicle is financed or leased, as having and maintaining physical coverage is usually a requirement of the loan.

It’s also a good idea to reassess your coverage needs altogether, and get rid of add-ons like rental car reimbursement and emergency roadside assistance.

 

Will reporting a lower annual mileage to my insurance company decrease my premium?

While it sounds like a good idea, the reality is that unless you live in California, you shouldn't expect a drastic change in your premium if you lower your mileage. According to our data, you’ll save — at most — a few dollars per month if your annual mileage falls at or below 7,500 miles.

However, drivers in California can save approximately 30% on their insurance premiums if their annual mileage drops to below 7,500 miles or fewer. See more information about low mileage auto insurance.

Should I switch to pay-per-mile or telematics-based insurance?

Whether you’re working from home or looking for work, you’re likely finding yourself at home for days on end while your car goes undriven for extended lengths of time. Car insurance based on telematics or usage may appear to be an attractive option for these situations.

While it may initially be cheaper, keep in mind that it’s usually a better option for those who are not driving much for the longterm. Once you resume your daily commute and other activities, these telematics and pay-per-mile insurance options may actually become more expensive than a traditional policy. However, they are definitely worth looking into if you’re looking to tighten your costs and lower your premium.

Do your research before enrolling in usage-based insurance, as it differs from company-to-company and may not be available in your state. Learn more about telematics insurance options.

 

Do I need to change my insurance to work as a delivery driver?

If you’ll be using your personal vehicle to work for a delivery service such as DoorDash, Grubhub, or UberEats, keep in mind your personal auto policy never covers any sort of business or commercial use. While these delivery services do offer their own insurance coverage for drivers, it tends to be extremely limited and usually meant to be used as a secondary source of insurance. This is why these services require their drivers to carry their own insurance.

Delivery drivers have two options to obtain insurance coverage while working:

1. Business-use endorsement or add-on to their personal auto insurance
2. Commercial auto policy

Some companies (like Allstate) are offering automatic coverage for delivery drivers using their personal cars for business purposes. Learn more below.

 

Will I lose my “student away from home” discount now that my college student is home?

The “student away from home” is a common discount, and is a cost-cutting measure for parents whose children have limited access to the insured car because they are away at school more than 100 miles from the residence. However, many college students have been sent home due to public health concerns surrounding COVID-19, potentially disqualifying them from this discount.

If you’re wondering if this discount will be voided as a result, contact your insurance company and make them aware of the change. Depending on your insurer, your discount could still apply.

 

Will the claims process change due to the outbreak?

The claims process should largely not be affected during this time. Most companies allow claims to be filed online, via mobile app, or by phone. The process will be handled by claims adjusters and other administrative staff as it is done normally.

 

How will being unemployed affect my rate?

Being between jobs shouldn’t affect your premium by very much. Nationally, unemployed drivers paid approximately 1% more for car insurance than employed drivers. This translates to an average of just more than $20 a year in extra costs.

 

 

Insurance company responses to COVID-19

Each insurance company is handling the financial impact of coronavirus on policyholders differently.

Some insurers are offering more leniency and premium relief than others, and some states have prohibited non-payment cancellations. Below is a list of some of popular insurance providers and their individual accommodations to customers experiencing financial setbacks as a result of the coronavirus crisis.

 

AAA

• Refunding 20% of premiums from March 16 to May 15, 2020.
• Complimentary roadside assistance for medical personnel and first responders.

 

Allstate

• Shelter-in-Place Payback: Refunding 15% of monthly premiums from the months of April, May and June.
• Complimentary identity theft protection for new and existing customers.
• Delaying payments for 60 days with no penalty for home, auto, and powersport insurance customers facing financial difficulties.
• Automatic coverage for policyholders using their personal vehicles for commercial purposes, such as the delivery of food, medicine, and other goods. This will remain active for as long as there is an emergency order in your state.

 

American Family

• Auto Insurance Premium Relief Credit: Refunding 10% of premiums for policies active between July and December 2020; credit will be automatically applied.

 

Amica

• COVID-19 Auto Refund Program: Refunding 10% of premiums over a four-month period, starting in July; varies by state.

 

Auto-Owners Insurance

• Safe at Home Refund: Refunding 15% of premiums from the months of April and May; refunds will be automatic.

 

Erie

• Refunding 30% of monthly premiums over a two-month period for customers with active auto policies as of April 1, 2020.

 

Farmers

• Reducing auto insurance premiums by 25% for the month of April and 15% for the month of May.
• Pausing policy cancellations through May 1, 2020. Any unpaid balance following this date will be rolled over to the next billing cycle without being subject to late fees or penalties.
• Extending payment due date to at least May 1, 2020, and waiving late fees for policy renewals; must be requested by making a call at 888-327-6335.
• Automatic coverage for auto and motorcycle policyholders using their personal vehicles for commercial purposes, such as the delivery of food, medicine, and other goods, through May 31, 2020 (date may vary by state).

 

GEICO

• GEICO Giveback Credit: 15% credit for auto and motorcycle policies up for renewal between April 8 and October 7, 2020. This credit also applies to new policies purchased during this period. No action required to receive this credit; it will be automatically generated when the policy renews.
• Pausing policy cancellations (due to expiration or non-payment) from now through April 30, 2020, or later, depending on your state’s leniency guidelines.

 

The Hartford

• Personal Auto Payback Plan: Crediting 15% on up to three months' of premiums for policies active as of April 1, 2020; credits will be automatic.

 

Kemper

• Refunding 15% in premium credit for the months of April, May and June for personal auto policyholders.

 

Liberty Mutual

• Personal Auto Customer Relief Refund: Refunding 15% of monthly premiums from two months; no action required, refunds will be automatic.
• Extending payment dates, pausing cancellations, and waiving fees for auto and homeowners insurance policyholders through June 15, 2020.
• Expanded coverage for policyholders using their personal vehicles for commercial purposes, such as the delivery of food, medicine, and other goods. This will remain active through July 1, 2020.

 

MAPFRE Insurance

• Staying Home Refund: Refunding 15% of monthly premiums from April and May; no action required, refunds will be automatic.
• Automatic coverage for policyholders using their personal vehicles for commercial purposes, such as the delivery of food, medicine, and other goods.

 

MetLife

• Auto Premium Relief: Refunding 15% of monthly premiums from April and May; no action required, refunds will be automatic.
• Automatic coverage for policyholders using their personal vehicles for commercial purposes, such as the delivery of food, medicine, and other goods; will remain effective from March 20 through May 1, 2020.
• Suspending cancellation of policies (due to non-payment) through July 1, 2020. Customers should contact MetLife directly for billing leniency.

 

Nationwide

• One-time premium refund of $50 per policy for policies active as of March 31, 2020; refunds will be automatically credited.
• Extending payment due dates, waiving late fees, and pausing policy cancellations for home and auto policyholders. This can be requested to Nationwide by calling 877-669-6877.

 

Progressive

• Personal auto premium credit: Refunding 20% of premiums from April. The same credit will be applicable at the end of May; no action required, refunds will be automatic.
• Pausing policy cancellations (due to expiration or non-payment) and waiving late fees through May 15, 2020, or later, depending on each state’s leniency guidelines.
• Billing leniency: Those who need extra time to pay their bill can call and request more time.
• Apron Relief Program:
  • First responders and health care workers will receive full-service claims experience if they are in a car accident; this includes transportation to work, expedited repairs and towing services, and, if needed, rental vehicles and deferred deductibles.
  • Expanded coverage for personal auto policyholders using their personal vehicles for commercial purposes, such as the delivery of food, medicine, and other goods.
  • Expedited roadside assistance and deferred deductibles for those who can't afford to pay out-of-pocket for the time being.

 

State Farm

• State Farm Good Neighbor Relief: Returning 25% of premiums due from March 20 through May 31 back to policyholders.
• Customers facing financial hardship should contact their State Farm agent to discuss payment options.

 

Travelers

• Stay-at-Home Auto Premium Credit Program: Refunding 15% of monthly premiums from April, May and June; no action required, refunds will be automatic.
• Suspending cancellation and non-renewal of policies (due to non-payment) from March 26-June 15, 2020, without late fees, interest, or penalties.

 

USAA

• Refunding 20% of premiums from the past two months; no action is required to receive this credit.
• Pausing policy cancellations (due to expiration or non-payment) and waiving late fees through June 17, 2020.
• Expanded coverage for personal auto policyholders using their personal vehicles for commercial purposes, such as the delivery of food, medicine, and other goods.

 

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How will coronavirus affect car insurance rates?

It is still too early to ascertain the impact of COVID-19 on car insurance rates, even as Americans sharply reduce how often they’re on the road. While auto insurance companies have reported fewer accidents and claims attributed to state lockdown orders — which means insurers get to keep all of that unclaimed premium as more profit — it is difficult to say definitively that they will pass on savings in the form of coronavirus car insurance discounts.

Insurance companies use multiple years' worth of data to set premiums, and this makes any changes to rates very gradual. Unless this substantial decrease in accidents and claims persists for a lengthy period of time, it is unlikely that auto insurance rates will permanently decrease as a side effect of the pandemic.