Auto Insurance Pandemic

How to Get Lower Auto Insurance Rates During the Pandemic

How COVID Lockdowns Affected Driving Behavior

Many businesses have experienced financial strain throughout 2020 as they struggled to stay afloat during the COVID-19 lockdown. Industries that weathered the storm well, despite making sweeping adjustments to rates, include the auto insurance industry.

Rebates and reduced rates benefited many policyholders in self-quarantined and, therefore, driving less. With the easing of lockdown restrictions, traffic levels have risen, but many employees continue to work from home. Does this mean rates will remain low or drop even further?

When the hard lockdown happened in March, roads became eerily quiet. With the drop in traffic, fewer car crashes occurred. Fewer people socializing and drinking also reduced drunk driving incidents. As a result, insurance claims dropped.

On the other hand, we experienced an unexpected surge in reckless driving. Empty roads were simply too tempting for speed freaks who couldn’t resist using them as personal race tracks. Speeding became a serious problem that saw traffic fatality rates skyrocket in many states.

How the Auto Insurance Industry Responded to the COVID Crisis

A study by Deloitte Center for Financial Services reported that lockdowns led to a year-over-year drop of 40.2% in miles driven in April and a 25.5% drop in May.

With fewer miles driven, the auto insurance industry responded by reducing premiums for those working from home, issuing refunds, and granting payment relief to people who suffered pay cuts and job losses.

You may think all this generosity resulted in lower profits for auto insurance companies. Quite the contrary. The drop in traffic levels led to a huge decrease in insurance claims. Despite dishing out over $10 billion to policyholders, insurance companies still profited because they paid out fewer claims. In fact, Deloitte noted that in Quarter 2, the industry actually had better results than before COVID.

Will You Benefit from Lower Auto Insurance Rates Going Forward?

Now in its third wave of coronavirus cases, America continues to struggle to get COVID under control. How we live and work will have to change, at least for now. More people may stay home for fear of becoming infected and more companies may adopt remote working practices.

For such possibilities, we may see fewer vehicles on the roads in the foreseeable future. Will this mean car owners will continue to enjoy lower insurance rates?

Insurance companies usually attempt to estimate rates one to two years in advance, taking into account a wide range of factors and historical data. No one could have anticipated COVID two years ago. Now, insurance companies are adjusting rates in light of the ongoing pandemic — which experts predict will be around for at least another year or possibly even two.

A number of factors will influence rates going forward:

  • Fewer cars on the road as more people work from home OR more cars on the road as people choose to drive rather than expose themselves to the virus on public transportation. Insurance companies may rely more heavily on vehicle telematics to track their clients’ miles driven and adjust the clients’ rates accordingly.

  • If the economy’s downturn and high unemployment levels persist, it may affect new vehicle sales. This, in turn, will result in a decrease in new insurance policies being sold. By the second quarter, Deloitte forecasted a 6.2% decline in personal auto insurance premiums written in 2020. On the bright side, TransUnion reports that auto insurance shopping rebounded in June, surpassing 2019 levels.

  • If bad driving behavior, like speeding, continues, car crashes will inevitably continue to increase. Even with less traffic on the roads, more reckless driving means the risk to insurers will remain high, as will insurance premiums.

Determining and setting policy premiums may seem like a delicate balancing act for an insurance company. Some insurers may err on the side of caution, but those who choose to lower their rates could gain the upper hand. Lower premiums may attract more customers, and the additional revenue from new business will result in higher profits.

How to Get Lower Premiums During and After the Pandemic

Auto insurance isn’t cheap. Since 2011, rates have jumped 29.6%, and in some states skyrocketed by as much as 86%. All but two states mandate car insurance for drivers. Even for drivers in those two states (Virginia and New Hampshire), we highly recommend against dropping your insurance policy to save money. Fortunately, for consumers, the highly competitive insurance market leads to ways to lower your premiums.

1. Inform your insurer of any change to your driving habits

If COVID has led to losing your job, working remotely, or working part-time, inform your insurer that you are traveling less.

Insurance companies take into account various factors when setting rates, such as marital status, age, profession, type of vehicle, credit rating, and driving history. Even before COVID hit, auto insurers were willing to adjust rates based on a change in your circumstances or driving frequency. So, it’s always a good idea to simply ask for a rerate.

2. Shop around for lower rates

When auto insurers started lowering premiums in April and May, some people switched to a carrier offering lower rates. For many, it was the first time they changed carriers.

Being with the same insurer for years doesn’t mean you get the best rates. You should shop around for better rates at least once a year. Doing so does not require as much time and effort as you may think. These days, you can easily compare insurance quotes online and find a better price.

3. Switch to a pay-as-you-drive plan

Usage-based insurance may become more popular if remote working becomes the norm. Also called “pay-as-you-drive” or “pay-per-mile” insurance, such policies require you to install a telematics device in your vehicle. Your insurance company will then be able to track how many miles you drive as well as your driving behavior like hard braking and sharp cornering. If you are driving less, switching to a mileage-based insurance plan can potentially save hundreds of dollars per year.

4. Practice safe driving

Car accidents and traffic violations push up your insurance rate. If you’ve picked up the bad habit of speeding during the lockdown, ease that foot off the gas. Driving behavior is one of the factors that influence rates, so always practice safe driving. Not only does it help keep premiums low but keeps you and everyone else safe on the roads.

No one knows for sure how COVID will affect auto insurance in the long term, but the industry has shown its flexibility in a time of crisis. You can use that flexibility to your benefit, especially if working from home has become your new normal.

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  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

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Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

RentalFair HousingPredatory Lending / HOEPAPost-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. creditbudgetinghomeless preventiondebt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).