If you’re like most people, you’ve cut way back on driving over the past year. Between offices sending employees to work from home to stores and restaurants closing their doors, there are certainly fewer places to go nearby. On top of that, people are traveling significantly less than before. In fact, the estimated 370 billion trips taken by Americans in 2020 numbered 26% lower than the 498 billion trips taken in 2019.
At the time, nearly 31% of employees who were working in an office in March of last year were switched over to work from home arrangements by April, and many remain working from home today. According to a Pew Research Center survey, only 20% of workers who say their job responsibilities can mainly be done from home actually did before the pandemic. As of October 2020, 71% of those workers are doing their job from home all or most of the time. Many are also saying they’d be happy if this continued to be how and where they work.
This all begs the question: Could not driving so much help me save money on my car insurance?
Rebates and Refunds
In 2020, several auto insurers gave back premiums due to fewer people on the roads and fewer accidents. Another reason for giving back portions of their customers’ premiums is the high unemployment rate, which peaked at an unprecedented level, not seen since data collection started in 1948, in April 2020 at 14.8%, leaving millions of insured motorists unable to pay their premiums.
Most of these refunds were given in March, April, and May of 2020 and ranged from $50 per vehicle back to 25% refunds for those months. If you did not receive one, try reaching out to your insurance company to follow up.
What You Can Do
With so many still working from home or unemployed, many people are wondering if paying high premiums for auto insurance makes sense when they are rarely taking their car out of the garage. If you find yourself to be one of those people, there are a few things you can consider doing to lower your rates, but there are risks.
Talk To Your Insurer
The first thing you should do is request a coronavirus-related payment delay or payment plan. Many auto insurers are willing to work with customers who are affected by the pandemic. Your insurer may offer to pause payments, set you up on a special payment plan, or issue you a premium refund.
Drop Optional Coverage
If you’re driving significantly less, you can consider changing your policy only to cover your state’s minimum requirements. Every state (except New Hampshire) requires at least a minimum amount of liability insurance. Liability coverage protects you if you are at fault for an accident and you injure someone or damage someone’s property. It also provides you with a legal defense if the other party files a lawsuit against you.
The benefits of this option are that you won’t have to pay for unneeded insurance while your car is not being driven, and you won’t have a coverage lapse. Also, if you keep comprehensive insurance, your car will be protected by non-driving problems, like if someone side-swipes your car while it’s parked on the street.
Cancel or Suspend Coverage
Suspending coverage is like pausing your policy but not canceling it. The benefit of doing this means you won’t have a coverage lapse on your vehicle. Driving during a lapse in coverage can lead to fines from the state and increased premiums.
Though suspending your coverage can save you money, it should only be done as a last resort and should only be considered under circumstances in which you will not be using your car at all. In fact, many insurance companies might not allow you to suspend coverage if you’re working from home. And don’t forget, your car won’t have insurance against problems that can happen without driving, like fire, animal damage, vandalism, or theft.
Canceling coverage altogether is never recommended for the above reasons. Not only are you putting yourself at financial risk if something happens to you, your passengers, others involved in an accident, and your car, but a lapse in coverage can cost you big. The consequences of driving with expired insurance can include an expensive ticket, license suspension, a lack of financial protection in the event of an accident, or a denial of insurance coverage, depending on your state.
Times are tough, and Freeway is here for you. Before you make any drastic changes to your policy, give us a call at 800-777-5620 to discuss your options and what the best coverage is for you.