Sign up & start saving!
Get our weekly newsletter for the latest in money news, credit card offers + more ways to save
Guides
Vehicle Guides
Need Financing?
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Car insurance after a recession
How an economic downturn can change your premiums.
When the market slumps, you could find your premium dropping due to lower car value and decreasing demand for add-ons. But if you decide to scale back coverage for other financial issues related to a recession, make sure you have enough protection to avoid paying for accident damage on your own.
How does car insurance change after a recession?
During an economic downturn, many people start cutting costs where possible, including car purchases and insurance coverage. Eventually, companies may respond by offering lower premiums to meet the lag in demand. This may result in:
- Reduced coverage. Customers looking to save money up front may lower the amount of coverage on their policies. If they go too far, they could get stuck with out-of-pocket expenses or, even worse, consequences for driving uninsured. And watch out for the possibility of more underinsured drivers on the road.
- Insurance payouts. Reduced premiums mean companies have less in store for insurance payouts. No matter how they choose to handle that problem, the solution could include closer scrutiny of claims or other business changes that affect customers.
- Insurance benefits. As everyone scales back, you might see your insurer scale back on customer benefits and programs that once saved you a pretty penny. A perk like accident forgiveness or roadside assistance might not be free anymore.
How much does a recession affect car insurance rates?
Overall, you can expect rates to decrease alongside some people’s decreased incomes and tightened budgets. Car-related factors that might get influenced by a recession include:
- Car value. A recession could make your used car less valuable due to price cuts on newer models. If insurers think your car is worth less, you could see decreased premium due to repairs being cheaper after an accident.
- Credit. Since banks typically tighten credit lines during this time, people may have a harder time establishing good credit, which could affect insurance rates in the long run.
- Coverage. You might opt for bare-bones coverage to save money. Just be sure you have enough to protect you financially if an accident happens.
- Job loss. If you’ve experienced a job cut, you may need low-cost insurance for a limited income. Choose less coverage, a cheaper provider or state programs if you live in California, Hawaii or New Jersey.
Compare car insurance after a recession
Get cheap car insurance after a recession
Although premiums may be going down all around, you can still take extra steps to save:
- Shop around. Some companies take a financial hit better than others. Consider shopping around again to make sure you’re getting the best value post-recession.
- Maintain healthy credit. Keeping a high credit score may work in your favor throughout the recession, including low insurance rates and easier car purchases.
- Keep a clean driving record. Safe drivers may get the best deal of all for their spotless records — spelling fewer claims for insurers.
- Qualify for discounts. Take advantage of all rewards available, including safe driver discounts, safety course completion and bundled policies.
- Low mileage rates. Saving by sticking close to home for recreation? Your low annual mileage could qualify for a lower premium with a standard or pay-as-you-go policy.
- Reduce coverage, if you can. Can you deal without coverage like medical payments, original parts or better car replacement? This could sink your premium even lower than before.
How do I update my car insurance after a recession?
During a recession, you could allow the market to automatically lower rates at your next renewal period. However, follow a few steps to update your coverage or go with a new provider right away:
- Reconsider your coverage needs, including your limits, deductibles and add-ons. If you’re shopping around, get quotes from several providers.
- Add or drop coverage with your insurance company by phone or through your online account.
- If applicable, start your new policy application, providing personal and vehicle details.
- Save your information and receive your new rate. For a new policy, finalize details, enter payment and start the policy.
Bottom line
A recession often means tightened finances, leading people to question every expense, including car insurance coverage. You can make sure you have adequate protection while finding ways to save at the same time.
Compare several providers to find the best coverage for an economic downturn.
Frequently asked questions about car insurance after a recession
More guides on Finder
-
Do I qualify for unemployment?
Get the financial help you need as you search for a new job.
-
Workers’ compensation vs. life insurance
These coverage options serve different functions but have one benefit in common.
-
How much does health insurance cost?
Most working Americans pay around $1,489 in premiums each year. Compare costs now.
-
Denied life insurance
Learn the common health reasons that lead to denials and how to get life insurance anyway.
-
Mortgage life insurance vs. term life insurance
Mortgage life insurance may be a good fit for people with serious health conditions, otherwise term life insurance offers more value and flexibility.
-
How to take the life insurance exam blood test
Learn what to expect from the blood test portion of your paramedical exam.
-
How to get life insurance as a freelancer
As a freelancer you may have unpredictable cashflow, but you can still find income protection with term life insurance.
-
Birth rates by state
Are birth and fertility talk the elephant in the womb? Finder research looks at birth rates, fertility rates and the average age of mothers in America.
-
Survivor benefit plans vs. life insurance
Survivor benefit plans pay out a monthly benefit to your surviving spouse or dependents — you won’t be able to designate any other beneficiary.
-
How to get health insurance
The best time to buy an affordable policy is NOW — during the annual open enrollment period.
Ask an Expert