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How does coronavirus affect car insurance?
See how payment plans and car accident claims are changing due to COVID-19
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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 you get in touch with your agent or claims adjuster since many companies are concerned about social distancing and customer safety. Plus, see how you could save money and possibly get a refund on your premium even before your policy renews.
What's in this guide?
How the coronavirus has affected 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 payment plans offered and claims process:
- Remote claims processing. Your local agent or claims adjuster might meet you through video or phone calls over in-person meetings for social distancing. Even claims inspections may rely on photos or videos of your car’s damage.
- Financial assistance. Companies may offer you payment relief through special payment plans, skipped payments or lowered premiums if you’re going through financial hardship because of the COVID-19 pandemic.
- Fewer claims and lower premiums. Many companies have given credits or refunds because of the dramatic drop in car accidents during COVID-19, and some have lowered premiums for the long term.
- 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.
- More drivers might use pay-per-mile policies. Thanks to fluctuating incomes and economic uncertainty, pay-per-mile insurance companies — like Metromile — expect this model to grow in popularity during the pandemic.
What if I can’t pay my premium during COVID-19?
If you expect to miss a payment, you can ask for financial assistance from your car insurance company. Many major companies have issued refunds or credits to your account over the past few months. In addition, they may still be extending payment due dates or postponing cancellations to ease the financial strain from job layoffs or pay cuts.
Multiple states have ordered 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.
Can I get a car insurance refund during the coronavirus?
Most car insurance companies have given customers a refund already during COVID-19, without plans for more refunds in the future. However, you can get a prorated refund on your car insurance premium if you make changes before your renewal.
That means if you drop coverage or raise your deductible after paying your monthly bill, your company should refund any payment for unused coverage. You also can get a prorated refund if you switch car insurance companies before your policy renews, minus any cancellation fees.
How COVID-19 car insurance refunds work
If your company offers a refund, expect the savings to come as a credit toward future bills or a direct refund by check or to your bank or credit card. Your company may give a refund to help customers during financial hardship or if new stay-at-home orders lower car accident claims.
In most cases, your refund or discount will get applied automatically. Your insurance company may have to wait for state regulatory authorities to approve the lowered premium or refund, delaying your refund for weeks or months. While you’re waiting, you may have to look at other payment options if you can’t pay your premium.
Can I get car insurance right now?
Yes, you can buy a new car insurance policy or switch companies during the coronavirus. If you’re experiencing long phone wait times to apply, you can bypass this problem by applying online.
In most cases, you won’t need to touch base with a live representative. Not many companies require you to call if you’ve filed a claim or need customer service.
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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 to drive legally and keep your car registered. Some states require you to cancel your car’s registration if you’re not keeping minimum coverage.
- Continue driving. If you’re driving to work, grocery stores or anywhere else, you’ll 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 these factors in mind if you’re dropping state-required coverage:
- You won’t be able to drive your car after canceling any state-required coverage
- You’ll face a higher premium when you get insurance again because the gap is considered a coverage lapse
- Your car could get repossessed if you drop coverage that’s required by your loan or lease contract
- You could face legal penalties if you drive around without insurance, including fines or jail time,
- You’ll be responsible for accident damage out of pocket if you drive uninsured
How to save on car insurance during COVID-19
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 750 to 1,000 miles a month, you could pay less in premiums. Less driving may land a discount that lasts your entire policy term if your new annual mileage is low enough. But update your policy if your mileage changes again to avoid a denied claim or owing extra premiums.
- Reduced coverage or liability only. If your car mostly sits in your garage, you might not need wide protection like collision and comprehensive coverage. Consider switching to liability only, or liability and collision, saving you hundreds a year.
- Switch to mileage-based insurance. A telematics or pay-as-you-go policy could save as much as 70% off your current rates for low mileage or safe driving skills like gentle braking and driving the speed limit. In many cases, you can find these mile-based or safe-driving programs at major companies like Nationwide and Progressive.
- Get cheaper quotes. While your car’s sitting in the garage and you’re at home, now’s the time to shop online to find a better car insurance 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.
- Ask your insurance company for help. Insurance companies understand we’re in the midst of a pandemic. Let your company know about your financial situation and learn about any insurance grace periods, premium decreases or credits to help you get by.
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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 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.
Questions about how COVID-19 affects car insurance
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