Traffic and premiums picking up
During the worst of the pandemic, restrictions on business activity and other aspects of normal life caused overall driving to drop well below pre-COVID levels, according to the U.S. Bureau of Transportation Statistics.
That meant fewer accidents and big profits for auto insurers. Progressive reported an 82% increase in net income, while Geico’s pretax earnings tripled during the second and third quarters of 2020.
In recognition, insurance providers voluntarily gave out more than $14 billion in refunds and credits last year, the American Property Casualty Insurance Association (APCIA) says.
Today, the Great Slowdown seems to have ceased. Government data shows traffic returned to normal in spring 2021 — and in June, activity on the roads was 10% to 20% higher than before the pandemic began.
Without missing a beat, insurance premiums have been rising, too. The Consumer Price Index recorded six straight months of hikes, finally ending in July.
State Farm, for example, has received approval to raise premiums by some 4% in Louisiana, according to S&P Global Market Intelligence. It’s also filed for increases in Arkansas, Connecticut, Georgia, Maine, Michigan, Pennsylvania, Virginia and West Virginia.
Insurers under siege
Even with conditions on the roads returning to normal, the fight is still raging for auto insurance relief.
Earlier this month, the Consumer Federation of America and the Center for Economic Justice declared that insurers collected $42 billion in excess premiums last year while providing only $13 billion in discounts and rebates.
“As we pointed out in letter after letter to insurance regulators throughout 2020, it was crystal clear that insurers’ premium relief was woefully inadequate,” said J. Robert Hunter, CFA’s director of insurance, in a release.
Only in California have regulators actually stepped in. The state’s insurance commissioner ordered providers to extend more discounts in March, saying companies have “continued to overcharge drivers.”
That’s not to say other states have been silent. Washington and New Mexico are taking initial steps, and in Massachusetts, Attorney General Maura Healey has sent several pointed letters to the state's insurance regulator.
The conflict has even ended up in the courts. In February, a set of class-action lawsuits were filed in Nevada, with the plaintiffs claiming that 10 leading auto insurers were keeping premiums unreasonably high. A similar class action against Geico was certified in Illinois.
For its part, the APCIA — the primary trade association for auto insurers — says the industry is “working to rebuild communities” and denounced the Nevada class action as “litigation profiteering.”
So can I get free money from my insurance company?
Unless more regulators step in or the class action suits succeed, insurers won’t be forced by law to hand out more money than they already have.
Most of the rebates provided last year were minimal; it was rare to get back more than half a month’s premium. On average, the advocacy groups say, insurers shortchanged policyholders by $125 per vehicle.
But some companies didn’t issue refunds or cut rates at all unless customers called and asked.
If you haven’t contacted your insurer yet, you might have free cash waiting for you. And with pressure mounting, your provider might be open to reviewing your premium, especially if you’re still driving less than ever.
Make note of how your habits have changed, such as the distance you’re not driving if you’re still working from home.
Other ways to shrink your premiums, starting today
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 trips to the grocery store.
Switch 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 done any comparison shopping over the last six months, you could be overpaying by more than $1,000 per year.
With a free quote-comparing service, you could find the best price in minutes.
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?
If saving on car insurance isn’t enough, here are a few more ways to give your bank account a boost until the economy bounces all the way back.
Invest your spare change. Using a popular investing app, you can automatically invest the “change” left over every time you buy something with your debit card. The money goes in a diversified portfolio of stocks, bonds and other reliable investments. You won't even notice the deposits, but you will notice the returns.
Cut the cost of your debt. If you’ve been relying on credit cards throughout the pandemic, expensive interest is bound to catch up with you. A lower-interest debt consolidation loan can fold your balances into a single, lower-interest payment — and help you find freedom from your debt sooner.