Drivers aren’t seeing 100% of insurance savings while claims are down — Are more serious accidents to blame?

Posted: 14 January 2021 7:39 pm

A 13% rise in deadly car crashes may have offset fewer claims in 2020.

If you’ve wondered how the coronavirus pandemic has affected car accidents, the preliminary data is in — and it’s showing concerning trends. Risky road behavior could be leaving insurers cautious about offering steep car insurance premium refunds or lower rates in 2021.

Pandemic driving down, deadly car accidents up from 2019

Drivers across the US have pared back their driving by 14.5% in the first nine months of 2020 compared to 2019, the National Highway Traffic Safety Administration (NHTSA) stated in its December 2020 Traffic Safety Facts report.

Despite driving fewer miles, fatality rates have increased from 1.10 per 100 million miles in 2019 to 1.35 for January to September 2020, the report said. That number gets even higher when you’re looking at the months during and immediately after pandemic lockdowns. The number of fatalities rose just over 13% from July through September 2020.

Risky driving behaviors

“Most fatal crashes are linked to risky behavior,” the NHTSA said in its open letter to drivers on Wednesday. The letter is part of a new social media campaign calling awareness to current driving safety risks.

The letter also states that trauma centers are seeing nearly two-thirds of drivers coming in with drugs or alcohol in their systems, as well as people driving at over 20% higher speeds in certain cities.

Commenting on these trends, an NHTSA spokesperson told Finder: “NHTSA is deeply concerned about the trends in highway safety evident in the preliminary 2020 data. The COVID-19 public health emergency, including stay-at-home orders and the subsequent re-openings, affected driving and fatality trends in 2020. NHTSA acted swiftly to identify and respond to these trends last year and continues to work with its safety partners to address them. NHTSA is committed to saving lives on our nation’s roads.”

Are car insurers funneling claims savings to drivers?

In the spring of 2020, many car insurance companies committed to refunding premiums as a response to people driving less during lockdowns and travel warnings.

But consumer advocate groups have called into question whether these refunds were enough compared to the extra profits these insurers have made.

Insurers typically returned 15% to 25% of premiums to policyholders for a month or longer, according to the National Association of Insurance Commissioners (NAIC) report, A Report of the NAIC on the State of Insurance Regulatory Response to COVID-19.

Since the average monthly car insurance premium is $108 per month, a 25% refund for two months would have saved policyholders $54 total, not enough to cover a month’s worth of premiums.

Is risky driving preventing lower car insurance premiums?

It’s likely that car insurance companies are holding back on offering huge refunds to drivers in anticipation of more serious accident claims.

Car insurers look at a variety of factors to evaluate the risks on the road, including the severity of claims being reported. Companies already had noticed a trend in risky driving like speeding and the seriousness of claims that followed, according to the NAIC report, which was released in October 2020.

The NAIC is the chief national organization that oversees industry regulations and helps state regulatory agencies set standards.

According to the NAIC report, the organization does “expect companies to respond to changes in data.” But the pandemic has left too many question marks about what future risks there are to let companies offer pricing in “real time.”

Get rewarded for driving less now, rather than later

Even if you don’t see a hefty refund or premium decrease across the board in your car insurance, you don’t have to wait to see lower rates. Try these tips:

  • Switch to a mutual company. A mutual insurance company like Amica is owned by policyholders and often pays out dividends when it makes extra profits for the year.
  • Try a pay-as-you-go policy. These policies, also called pay-per-mile car insurance, let you pay car insurance premiums based on how many miles you drive. Some companies are including telematics features, which also track and factor your driving skills into your premium.
  • Update your policy’s expected annual mileage. If you expect to put fewer miles on your car than before the pandemic, be sure to update that detail on your policy. Some insurers award low-mileage discounts up to 20% if you drop your mileage under the standard 12,000 miles a year.

Image: Getty

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