Auto insurers thrive during the pandemic

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Back in December 2020, the Consumer Federation of America and the Center for Economic Justice sent a public letter to state insurance commissioners, saying auto insurers should be required to deliver a new round of refunds to policyholders.

An analysis by the two groups showed crashes down 31% since the beginning of the pandemic compared to the year prior.

The Nevada lawsuits — which name as defendants State Farm, USAA, Geico, Acuity, Liberty Mutual, Farmers, Progressive, Travelers, Nationwide and Allstate — contend that the trend has continued into 2021.

So can I get free money from my insurance company?

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An analysis by the U.S. Public Interest Research Group Education Fund took a state-by-state look at how insurance companies repaid parked motorists last spring.

“Regardless how much each company profited, the majority of insurers didn’t give back more than half of one month’s premium,” the consumer watchdog says.

But some companies didn’t issue refunds or cut rates unless customers called and asked.

That means you could get free cash just by contacting your insurance agent. With pressure mounting, your insurer might be open to reviewing your premium, assuming you’re still driving less than ever. Make note of how your habits have changed, such as the distance you’re not driving while you work from home.

Other ways to shrink your premiums, starting today

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If your insurance company won’t give you a pandemic discount, there are still a number of ways to cut down on your insurance bill.

Drop optional coverage

Some auto insurance policies include extras that you may be able to do without for a while. For example, can you cut out the option that pays for a rental car while yours is at the repair shop?

Removing these extras can save you a few bucks, just make sure you’re still meeting your state’s minimum liability coverage and are still protected in case of an accident during those few trips to the grocery store.

Switching insurance providers

If your insurer won’t give you a break, maybe you can find a new one that will.

Even if you can’t switch to a company with pandemic discounts, shopping around for the best rate can still help you lower your bill.

If you haven’t comparison-shopped over the last six months, you could be wasting more than $1,000 per year. With a free quote-comparing service, you could find the best price in minutes.

Raise your deductible

If the risks of a claim are lower, you may consider raising your deductible — that’s the amount you pay out of pocket on a claim before your insurer takes care of the rest.

A higher deductible will save you money on monthly premiums, but it could lead to more costs if you do end up in an accident.

Suspend your car insurance

In some cases it may be possible to put your insurance on hold if you’ve completely stopped driving during the pandemic.

This path could be tricky — it could result in fines or a suspended registration from the DMV, and it may not be possible at all if you’re making car payments to the bank.

You’ll also need to store your vehicle in a safe and secure spot, because you won’t have coverage from non-driving related losses, like theft.

What if I need even more savings?

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If saving on car nsurance isn’t enough, here are a few more ways to give your bank account a boost until the economy bounces back:

  • Slash your other insurance bills. By doing some simple comparison-shopping using online tools, you can save hundreds on your homeowners insurance and life insurance.

  • Develop a side hustle. You can turn your hobby into a lucrative side gig using the world’s largest online marketplace for digital services. Just create a profile describing your in-demand skills, and see who comes calling.

  • Refinance your mortgage. Want to really slash your bills? Even if your mortgage is a year old, you could refinance to a much lower interest rate. With rates hovering near all-time lows, about 19.4 million U.S. homeowners could cut their house payments by an average $308 per month, according to mortgage tech and data provider Black Knight.

About the Author

Ethan Rotberg

Ethan Rotberg

Reporter

Ethan Rotberg is a staff reporter at MoneyWise. His background includes nearly 15 years as a writer, editor, designer and communications professional. He loves storytelling, from feature writing to narrative podcasts. His work has appeared in the Toronto Star, CPA Canada and Metro, among others.

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