Consumer Reports has no financial relationship with advertisers on this site.
As cars sit unused and household budgets tighten, drivers may have new ways to save money on their car insurance policies. Personal vehicle travel in the U.S. is down nearly 50 percent compared with typical traffic volume, according to Inrix, a provider of traffic data. That means decreased risk for insurance companies—which should translate to lower premiums for consumers.
Already, some insurers, including Allstate, Geico, and USAA, have started giving rebates of up to 15 percent on insurance premiums. Most have relaxed their payment and cancellation terms as well. But what other relief is available?
“Many consumers are reeling from sudden job loss and the resulting loss of income, including extended furloughs and layoffs," says Chuck Bell, programs director for advocacy at Consumer Reports. "State insurance commissioners can help by issuing industry-wide guidelines to make sure all auto insurers are treating their customers fairly.”
Consumer Reports contacted 20 of the top-rated auto insurance companies in our rankings to ask what relief they’re putting in place during the pandemic and economic crisis. We found that all of them are willing to help consumers, but some are being more proactive than others.
Some insurers are automatically delaying cancellations and deferring premiums, but others require consumers to contact their agent or company to request help. These policies are usually prominently displayed on insurance company websites, along with contact information. We also found that changes are being made quickly, so it’s best for consumers to call their insurance company or agent directly to get the latest information.
CR contacted insurance industry analysts and state insurance commissioners to ask what new consumer relief programs are in place. We also asked personal finance experts ways for policyholders to cut their monthly bills if they’re not driving very much right now.
Here are some steps you can take to reduce your car insurance premiums, and more information about what insurance companies are doing.
Is a Refund Available?
Because fewer accidents are happening, the insurance industry as a whole could end up saving $100 billion from claims that won’t need to be paid, says Dan Karr, founder and CEO of ValChoice, a service that rates insurance companies.
At press time, multiple insurance companies said they planned to automatically pass a portion of those savings to consumers. Details about these programs are displayed on insurance company websites, most of which have a specific section dedicated to their responses to the COVID-19 pandemic.
Depending on their insurer, customers will likely see these refunds applied automatically—either as premium reductions or account credits. Policyholders don't have to take any action or make any requests. CR expects to see more companies follow suit.
• Allstate promises that most customers will see a 15 percent rebate on premiums for April and May.
• Amica, a CR recommended insurer, says its customers will see a 20 percent credit on their auto premiums for April and May
• USAA, a CR recommended insurer, says its policyholders will receive a 20 percent credit on two months of premiums in the coming weeks.
• American Family Insurance is providing a onetime, $50 payment for each vehicle insured under a personal auto insurance policy.
• Liberty Mutual and Safeco are providing a 15 percent refund for two months of policyholders’ personal auto premiums.
• GEICO is offering a 15 percent credit to auto and motorcycle policyholders as their policies comes up for renewal.
• Nationwide says it is offering a one-time premium refund of $50 per policy
• Auto-Owners Insurance told CR that it plans to announce a premium refund program in the near future.
• Farmer's and 21st Century policyholders will receive a 25% reduction in their April premiums
• NJM, a CR recommended insurer, has announced it will refund 15 percent of the equivalent of three months of premium payments to policyholders.
• Chubb, a CR recommended insurer, says that when its policyholders renew their policies, they will receive a credit reflecting a 35 percent premium reduction for the months of April and May, with additional discounts for subsequent months, as the situation warrants.
• Mercury says it plans to return 15 percent of monthly auto insurance premiums to customers in April and May
Call Your Agent or Insurance Company
If you're having trouble right now paying your premium, your first step should be a phone call.
“Just call your company, call your agent, and see how they react,” says Karr.
Indeed, many insurance companies CR contacted have not instituted across-the-board customer assistance policies, but told us they'd work with policyholders facing hardship.
Remember that it’s in these companies’ best interest to work with consumers, says Penny Gusner, senior consumer analyst for Insure.com, an insurance quote comparison website.
“For the most part, insurance companies are looking to do right by their customers, which in turn should help their retention rate,” she says. “The ones holding back may see their customers shopping around in a few months when the world is back to a more normal state.”
Get Help With Premiums and Cancellation
CR asked our top 20 recommended insurers what they are doing to assist customers. We also examined the coronavirus policies of some major insurers that might not be CR recommended. All of them had some form of payment or cancellation deferral in place. That doesn’t mean policyholders won’t have to pay their monthly premiums later. Instead, insurance companies may pause payments for a month or two and then spread those payment amounts out over the remaining months of a policy.
Steve Manders, Georgia’s deputy insurance commissioner, said that “over 90 percent of our auto market has voluntarily done something,” he told CR. “A lot of them are doing a premium deferral and some of them are doing premium credits.” In addition, many insurers are no longer requiring commercial insurance for drivers who are using their cars to make deliveries or giving rides to healthcare workers or patients.
Because each insurer has its own guidelines, it’s important for customers to read the fine print and see how long payments or cancellations are deferred, and when they’ll have to pay those premiums back. For example, Shelter Insurance and NJM Insurance are currently offering relief through April 30, Travelers and Progressive are offering similar benefits through May 15, while Wawanesa General Insurance is offering case-by-case payment and cancellation deferrals through May 25. Many of the companies CR interviewed said these dates could be extended, depending on the crisis.
The policies can change from day to day and vary from company to company, so it's best to check your insurance company's website. Because insurance is regulated at the state level, these relief policies may also change depending on new rules and regulations.
State commissioners are currently working together on these issues, according to Alana LaFlore, spokeswoman for the National Association of Insurance Commissioners (NAIC). “The state commissioners are engaged in calls with each other and the NAIC on a variety of issues to share best practices and discuss important topics,” she told CR.
Don't Let Your Insurance Lapse
If you aren’t driving and your bills are piling up, it may be tempting to stop paying your car insurance bills and allow your policy to lapse. But that's a bad idea because it could result in a fine or higher premium, experts tell CR.
“Most states will penalize you for having a registered car without insurance. In some states, the penalties start after a one-day gap in insurance,” says Gusner. Insurance companies may also charge policyholders a higher rate after they reinstate their policy. “Beyond being in trouble with the state, insurance companies will charge you more if you have a lapse in coverage. So any money you may save in the month or two will likely be lost when you put insurance back on your vehicle at higher premiums.”
Most insurance companies are delaying cancellations due to non-payment during the COVID-19 pandemic. So, if you do get a notice of cancellation, or if you know you're unable to pay your monthly premium, call your insurance company.
“Many insurance companies are trying to work with their customers to make it so that they can delay payments at this time without fees or other penalties,” Gusner said. “If you can’t update the registration on your vehicle because the DMV is closed, insurance companies will work with you on that as well.”
Review Your Coverage
There are additional steps you can take to save money on your car insurance:
• Ask for a mileage discount. Insurance companies usually provide discounts to drivers who don’t use their cars very often. Call your insurer and tell them how many miles you used to drive before the pandemic started, and then let them know how that’s changed. “Typically, insurers would make you wait for any discount until the next policy term started, but some insurance companies seem to be saying they’ll reduce rates for less mileage now,” Gusner said.
• Adjust your coverage. For example, changing your deductible (how much you have to pay out of pocket if you file a claim) can save you money. “Maybe over time your needs have changed. Maybe in some places your limits should be higher,” says Glenn Shapiro, president of Personal Property-Liability at Allstate. If your car is older, you may not need comprehensive and collision coverage on it. “Those types of things can be a factor,” he said. Note that if your car is leased or financed, you will likely be unable to drop certain coverages.
• Get a pay-per-mile policy. These insurance policies may also help cut premiums by up to 50 percent, a CR analysis showed. These programs only charge based on how much you drive, but may increase your rate if your driving is riskier than average. Because they keep track of drivers, they also raise some privacy concerns.
• Cancel coverage on the cars you aren’t driving. This is a drastic step, but if you own multiple vehicles and are only driving one, you can choose to cancel the coverage on the vehicle(s) you aren’t driving. Note that you may not be covered for vandalism, theft, or other damage to the vehicle. And remember to keep an eye on your car while it’s parked, so it isn’t damaged by stale gas or other problems that can occur when a car sits without being driven.
If Your Provider Isn't Helping, Switch
If you don’t like how your insurance company is treating you during a time of hardship, you can always switch providers.
“How they react is probably a good indicator of how they’re going to react when you have claim,” Karr told CR. “It’s a good test—when things aren’t going well for me, how are they going to react? If your company isn’t performing well, switch.”
In a recent survey of Consumer Reports members, 62 percent of those who had switched car insurance providers in the past five years said they’d found a better price.
If you are looking for a new provider, be sure to take advantage of CR’s comprehensive ranking of top-rated insurance companies to choose from.
Keep Premiums From Piling Up
If you've deferred payments, prepare for slightly higher bills in the future. “At some point, obviously, we have to collect premiums, so we can’t have that go forever,” Allstate’s Shapiro said.
Allstate and others told CR that they’d spread those back payments out over multiple months to make it easier for policyholders to make them up—but consumers should still make a plan.
“All of a sudden we’re two to three months down the road, and you get two to three months premium due and that creates a hardship in itself,” Manders, the deputy commissioner in GA, told CR.
In addition, if you’ve reduced your coverage, asked for a mileage discount, or if you've taken a car off the road, remember to change your policy back if you start driving more miles.
“When somebody’s driving returns to the way it was before, it’s their responsibility to call an insurance company and tell them that,” said Karr. If you are taking a car off the road entirely, he recommends putting a note on the dashboard as a reminder not to use the car until the insurance has been reinstated.
And if you do have to file a claim during the pandemic, you should expect some leeway for issues that aren’t under the control of the insurance company, vehicle owner, or repair shop, says David A. Sampson, president and CEO of the American Property Casualty Insurance Association, an insurance industry trade group.
“Auto insurers are prepared to be as flexible as possible within the terms of the policy,” he said. This includes using video inspections to assess claims, and being more forgiving of delays when repair shops are closed or operating at reduced capacity.
Consumer Reports is an independent, nonprofit organization that works side by side with consumers to create a fairer, safer, and healthier world. CR does not endorse products or services, and does not accept advertising. Copyright © 2020, Consumer Reports, Inc.