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How does coronavirus affect car insurance?
Customer service and car accident claims are seeing the biggest impact so far.
The coronavirus doesn’t impact car insurance coverage as much as other types of policies for travel or business. But the pandemic may affect how your insurance company communicates with you through customer service. In addition, people are driving far fewer miles than usual, leading some insurers to pay back a portion of customers’ premiums.
What's in this guide?
How does the coronavirus affect car insurance?
Your current car insurance coverage shouldn’t be affected by the coronavirus. But you might see a few changes to your company’s customer service or payment process:
- Longer customer service wait times. Many customers have questions about their coverage or payments during the virus outbreak. This may lead to long wait times to speak with customer service.
- Remote claims processing. Rather than in-person meetings with your local agent or claims adjuster, you might meet through video or phone calls to comply with social distancing. Similarly, claims inspections may rely on photos or videos of your car’s damage. These remote claims may be a huge change for some companies, especially smaller insurers, while fitting right in with other insurer’s innovative online services.
- Financial assistance. Car insurance companies are offering relief to customers going through financial hardship because of the coronavirus. Their exact measures differ based on the company and the state you live in.
- Fewer claims and lower premiums. Many insurance companies are offering credits or refunds in response to the dramatic drop in car accidents during the COVID-19 pandemic. For example, California has seen traffic accidents drop to half the usual number, according to a UC Davis Road Ecology Center traffic study. Because fewer accidents mean fewer claims payments, insurers are offering paybacks anywhere from a flat $50 per car to 35% off your premium for several months.
- Free coverage for delivery drivers. A few companies like Allstate and Farmers are extending customers’ personal auto coverage to commercial use if they’re using their cars for delivering essentials. This can include those delivering groceries, medical supplies or pharmaceutical goods.
What if I can’t pay my premium during the coronavirus?
If you expect to miss a payment, you can ask for financial assistance from your car insurance company. Remember many major companies are refunding or crediting your account for the next few months. They’re also extending payment due dates, waiving late fees or postponing policy cancellations to ease the financial strain from job layoffs or pay cuts.
And some states are ordering longer insurance grace periods, such as 60 days in California. The extended period means your policy won’t be canceled as early if you can’t make your payments.
Car insurance premium refunds
Car insurance companies are providing customers with savings on their monthly premiums. The savings may come either as a credit toward future bills or a direct refund by check or to your bank or credit card.
Insurers are offering these refunds as a response to the drastic drop in car accidents and claims over the last few weeks. You should qualify if your personal auto policy was active by the date your insurer specifies, usually March or April 2020. Most policyholders won’t need to take any action.
These premium refund details were updated on April 21, 2020:
| Company | Premium refund amount | Qualifications | How to get it |
|---|---|---|---|
| 21st Century | 25% savings in April with a possibility of reduced premiums in May or June if accidents stay low | None specified | No action needed. You’ll see the savings on your bill automatically. |
| AAA | 20% refund for April and May premiums | Customers with a policy in force as of April 30, 2020 | No action needed. You’ll receive your refund after state departments approve the lower premiums. |
| Allstate | 15% savings for April and May 2020 premiums | Most customers |
|
| American Family | $50 per car insured in each household | All customers with a personal auto policy in place as of March 11, 2020 | No action needed. You’ll receive a mailed check to the policyholder’s address on file. |
| Auto-Owners | 15% refund to policyholders for April and May |
| No action needed. Your automatic refund is expected to be processed in May. |
| Chubb | 35% savings in premiums for April and May | None specified | No action needed. |
| Erie | Lowered rates depending on state regulations and each customer’s coverage | None specified |
|
| Farmers | 25% savings in April with a possibility of reduced premiums in May or June if accidents stay low | None specified | No action needed. You’ll see the savings on your bill automatically. |
| Geico | 15% credit on policy renewals, with an estimated average of $150 savings per customer | Applies to all current policyholders between April 8 and October 7, 2020 | No action needed. The credit applies automatically when your policy comes up for renewal. |
| Kemper | 15% credit toward April and May premiums | Policies in force by April 30 or May 31, 2020 will receive credit for the next month | No action needed. |
| Liberty Mutual | 15% refund on two months of premiums | Current customers as of April 7, 2020 | No action needed. You’ll receive your refund automatically through your most recent payment method or by check. |
| Mercury | 15% savings for April and May 2020 | All personal auto policyholders | No action needed. You’ll receive your account credit automatically. |
| Nationwide | One-time $50 premium refund | Customers with a personal auto policy active as of March 31, 2020 | No action needed. You’ll receive your refund automatically through your most recent payment method. |
| Progressive | 20% credit for April and May, with a possibility of additional credits in the future | All personal auto policyholders with active accounts by the end of each month |
|
| Safeco | 15% refund on two months of premiums | Current customers as of April 7, 2020 | No action needed. You’ll receive your refund automatically through your most recent payment method or by check. |
| State Farm | Average 25% in premium credits depending on state regulators for premiums between March 20 and May 31, 20202 | None specified | No action needed. You’ll receive your account credit automatically to premiums starting June 2020. |
| The Hartford | 15% refund on April and May premiums | Personal auto customers with policies in force by April 1, 2020 | No action needed. You’ll receive a credit back through your last payment method. If you have a balance due, the amount will be credited to your account. |
| Travelers | 15% credit on April and May premiums | Customers with personal auto policies in force any time between April 1 and May 31, 2020 | No action needed. You’ll receive your account credit automatically, or a direct refund if you’ve paid in full. |
| USAA | 20% credit on two months of premiums | All auto insurance policies active as of March 31, 2020 | No action needed. You’ll receive your account credit automatically. |
When will I receive my refund?
Many companies are waiting for state regulatory agencies to approve their credit, refunds or lowered premiums first. Once approved, the amount of time depends on your insurance company and the method of payback. Many companies will process the refund as soon as possible with automatic deposits or refunds back to your credit card.
Can I get car insurance right now?
Yes, you can buy a new car insurance policy or switch companies during the coronavirus. Keep in mind you may wait longer than normal for customer service when buying over the phone.
You can bypass this problem by applying online. In most cases, you won’t need to touch base with a live representative. Only a few companies require a call if you’ve filed a claim recently or if they don’t offer online services.
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Do I need car insurance during the coronavirus?
While you may not be driving as much during the coronavirus outbreak, you might need car insurance to:
- Meet state requirements. Most states require a minimum amount of car insurance coverage in order to drive legally and keep your car registered. Some states require you to cancel your car’s registration if you’re not keeping minimum car insurance coverage.
- Continue driving. If you’re driving to work, grocery stores or anywhere else during the coronavirus, you might want coverage in case of an accident.
- Keep your car protected in storage. You might want comprehensive coverage even if you cancel other coverage while your car is in storage.
- Meet car loan requirements. If you have a car loan or lease, your lender will typically require you to have a certain amount of coverage, typically liability, collision and comprehensive coverage.
Can I drop my car insurance?
Dropping car insurance is generally not a good idea. If you’re hurting financially and own your car outright, it may be possible to drop coverage. You may need to cancel registration with your state or file a form for non-use.
Keep in mind you won’t be able to drive your car after canceling coverage. You’ll also face a higher premium when you buy coverage again because of the lapsed coverage.
You shouldn’t drop coverage on a financed car because it will violate your lender’s contract. You also shouldn’t drop coverage if you need your car to get around. Driving uninsured could lead to steep legal consequences like fines or jail time, and you’ll be responsible for any car accident damage out of pocket.
How can I save on car insurance during the coronavirus?
If you’re not driving as much or having trouble keeping up with your bills, you can cut your car insurance premium in a few simple ways:
- Update your mileage on your policy. If you’re driving less than the average of 750 to 1,000 miles a month, you’ll typically pay less in premiums. Less driving means less risk and may land a discount that lasts your entire policy term if your new annual mileage is low enough. Just be sure to update your policy again when you’re back on the road regularly to avoid a denied claim or owing extra premiums.
- Reduced coverage or liability only. If your car sits in your garage most of the time, you might not need a full coverage policy with collision and comprehensive coverage. You could consider switching to liability only, or liability and collision if you still drive a little. That switch could save you hundreds a year.
- Switch to mileage-based insurance. If you’ve recently started working from home, a telematics or pay-as-you-go policy could save you as much as 50% off your current rates if you’re a good driver. A black box device in your car or a tracking app detects your driving mileage and skills like braking or turning corners. Not keen on switching insurers? In many cases, you can find these mileage-based programs at major companies like Nationwide and Progressive. But if you have a history of speeding or braking sharply, you might not be able to get a policy.
- Get cheaper quotes. While your car’s sitting in the garage and you’re sitting at home, now’s the time to shop online for car insurance to find a better deal. In a recent Finder survey, most people found they could save over $500 a year just by switching to a cheaper car insurance company.
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Can I get a ticket for driving under shelter-in-place orders?
The short answer is yes, it’s possible to get a ticket. However, the main way you might receive a ticket is by driving for reasons not allowed by your state’s shelter-in-place order.
For example, if hotels are open to essential travelers but you’re going there for vacation, you could receive a ticket if a police officer investigates your reason for traveling. Keep in mind that these tickets can drive up your car insurance premium, so it’s in your best interest to avoid them.
Ways to avoid getting a shelter-in-place ticket:
- Follow the rules of the road. Most police departments aren’t using checkpoints to validate reasons for traveling. However, you may get asked if you’re violating another rule of the road, such as speeding or having taillights that don’t work. Some areas like Los Angeles are seeing an uptick in speeding drivers while the roads are less congested.
- Stick to your state’s shelter-in-place order. If the order allows limited outdoor activities and parks or campgrounds are open, traveling for these reasons should be legal. Otherwise, limit travel to grocery stores, medical offices or local restaurants for takeout only when necessary.
- Look at local police enforcement. Know what measures your local police are allowed to take if people violate the orders. You can do this by researching your state’s shelter-in-place order, looking for specifics about police enforcement. If you can’t find this information, consider asking your local police department clarifying questions.
- When in doubt, opt for what’s clearly allowed. State orders don’t always clear up every decision about whether to stay home or go out. When you’re not sure, ask yourself if the reason for traveling is unavoidable. When possible, consider alternatives to the travel you were planning, such as video-calling your family or backyard camping.
How do car accident claims work during the coronavirus?
If you file a claim during the coronavirus, the claims process might involve these steps:
- Describe details about your car accident. You can file the report online or by phone, although phone claims may involve a longer wait time. Include your policy number when filing.
- A claims adjuster will contact you for more information. You may hear from the adjuster by phone or email.
- Send documents to support your claim. Your insurance company may need additional proof of your claim like medical bills or a police report.
- Get a damage estimate remotely. Because of the coronavirus, you may be asked to provide a video or photos of your car’s damage. In some cases, your adjuster may set up a video call.
- Your insurance company will send a settlement letter. The letter should include a payout offer. You can accept the offer or negotiate the amount.
- Agree to the settlement. Once you reach an agreement on the payment, sign the appropriate paperwork.
- Get your settlement check. You should receive your settlement check in the mail within a few weeks.
Bottom line
Changes to car insurance because of the coronavirus are minimal, though you might feel the effects more if you need customer assistance or claims support. Despite potentially long wait times, you might consider switching car insurance to save money during the virus outbreak.
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