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Car insurance after a recession

How an economic downturn can change your premiums.

Updated

Fact checked

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

Name Product Roadside assistance New car protection Accident forgiveness Safe driver discount Available states
Progressive
Optional
30%
All 50 states
Discover coverage that’s broader than competitors, valuable discounts up to 30% off and perks like shrinking deductibles that reward no claims.
Clearcover
Optional
Yes
AZ, CA, IL, LA, OH, TX, UT and WI
Get instant online support and score a low rate thanks to online data that sets premiums automatically.
The AARP Auto Insurance Program from The Hartford
Optional
Yes
All 50 states & DC
Drivers over age 50 can enjoy low rates and perks designed for mature drivers, plus freebies and AARP member perks like free replacement cost coverage.
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Compare up to 4 providers

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:

  1. Reconsider your coverage needs, including your limits, deductibles and add-ons. If you’re shopping around, get quotes from several providers.
  2. Add or drop coverage with your insurance company by phone or through your online account.
  3. If applicable, start your new policy application, providing personal and vehicle details.
  4. 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

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