Drivers are either staying home or driving less because of the coronavirus pandemic, and many are seeing savings on their car insurance because of the reduced activity.
Drivers putting fewer miles on their cars have resulted in fewer accidents, which means insurers are making money by paying out fewer claims. In turn, insurance companies are passing on savings to their customers, many of which have been hard hit by the pandemic. Drivers shouldn’t expect the savings to continue forever, though. As more and more people get back on the road, prices will rise accordingly.
“There is no question fewer miles were driven over the last few months,” wrote Pat Duncan, vice president of operations for Nodak Insurance Group, in an email to the Herald. “As a result, automobile claims have decreased by a similar amount in most areas.”
According to Duncan, over the past few months the total number of miles driven has decreased by as much as 50% in some areas of the county, though in the upper Midwest, the decrease wasn’t quite as much.
Insurance companies are taking different approaches as to how they pass savings on to customers. Some companies are returning a portion of their insurance premiums, lowering premiums or are giving refunds for each vehicle insured with the company. Nodak is passing along over a million dollars in savings to policyholders, according to Duncan.
Marcus Steien, an agent with American Family Insurance in East Grand Forks, said his company has provided clients with $50 checks per insured vehicle, no matter its level of coverage or age. Steien said he is a relative newcomer to the business with five years of experience, but his conversations with long-time agents have shown just how unique the pandemic has been for his industry.
“I was talking to some veteran (agents) and they’ve never seen anything like this, so it’s pretty crazy,” Steien said.
Savings passed on by insurance companies vary by company, but they can also vary by individuals who are customers of the same company. Insurance premiums are determined by, among other things, multiple years of driving history, so discounts may not be the same for everyone.
Customers don’t need to reach out to their agents to take advantage of the pandemic-induced discounts, Duncan said. In most cases, they happen automatically, but for some customers, there is good reason to make the call.
People who have experienced financial hardship due to the pandemic have some options to reduce their payments. Switching to a higher deductible can bring payments down, as can adjusting the level of coverage. Customers also can request to have payments deferred. Communication with the agent is key.
“I think that's the biggest thing, is reach out to the agent to see what options are available to you,” Steien said.
Insurers are beginning to see drivers put on more miles as summer gets into swing. As more people return to their normal driving habits, rates are sure to follow, though it is difficult to predict when this will happen as the pandemic continues to play out.