Like pretty much every industry, COVID-19 massively disrupted the auto insurance world. A combination of empty roads and pandemic-stricken bank accounts led policyholders to request discounts and relief from their providers, and to their credit, most responded in some capacity.
According to the Office of the Insurance Commissioner, Washington State, at least 28 major auto insurance companies offered some form of COVID-19 relief. Liberty Mutual waived late fees and continued coverage for delinquent policyholders. Allstate gave $1 billion back to customers through the Shelter-In-Place Payback program. Many others simply slashed premiums.
COVID-19 continues to ravage incomes and livelihoods, leaving many to wonder:
- Will I get another break on my car insurance?
- If I work from home and barely drive anymore, will I get a discount?
- Lastly, how can I get a permanent discount on my auto insurance in general?
Let’s investigate potential breaks (and discounts) on your auto insurance in 2021.
Will you get another break on auto insurance this year?
Yes and no.
You probably won’t get another slash in premiums, but some relief programs will continue into 2021. Most of the insurance providers in that list of 28 above, published press releases in late 2020 recapping their total COVID-19 relief and promising to provide some form of continuing relief into 2021.
For example, State Farm offered some pretty generous relief in 2020 in three forms:
- The Good Neighbor Relief Program, which slashed premiums for policyholders by up to 25% between March 20th and May 31st of last year, totaling $4.2 billion in savings.
- Doubling the initial discount for enrolling in Drive Safe & Save to 10%, so in total, policyholders could save up to 35% on their premiums.
- Lastly, State Farm offered additional relief on a case-by-case basis, stating “if you are a customer currently facing financial burdens, call your State Farm agent.” Most providers offered a similar “we’ll take care of you” promise, which by all accounts was a sincere offer.
Looking forward to 2021, however, State Farm hasn’t expressed plans to offer another automatic refund on premiums like they did last spring. They will, however, continue offering the increased Drive Safe & Save discount and case-by-case financial assistance. That seems to be pretty par for the course; auto insurance providers gave refunds, discounts, and financial assistance in 2020, and will only offer the latter two in 2021.
No refunds in 2021, but premiums might drop a little
In lieu of another sweeping percentage refund, many auto insurance providers are simply lowering premiums if they can. In response to consumer feedback, most providers have promised to rejigger their algorithms to factor in things like less driving, work from home, and more. It seems to be working; the average American auto insurance premium has dropped for the first time in a decade, decreasing by 1.7% to $1,636 in 2021. That’s not much, and certainly nowhere near the ~25% discount you might’ve gotten in 2020.
Your premiums may even increase in 2021
Don’t act surprised if your auto insurance premiums actually increase in 2021. A minus 1.7% average is a razor-thin margin, after all.
My premiums increased by 7%, even though nothing else changed and I barely drove my car. I called up my provider, and they said rates are just going up across the board in Georgia. I think the customer service rep was surprised when I wasn’t angry, just genuinely curious. She revealed what she could, so I investigated other reasons why rates are going up this year. Factors include:
- The rise in value of new cars.
- The rising complexity of new cars, and the cost of repairs.
- The rising cost of medical bills.
- The increase in distracted driving.
- The increase in speeding and traffic violations during COVID-19.
While it’s entirely normal to feel entitled to lower auto insurance premiums in 2021, the reality is that driving is as risky as it’s ever been, and claims are getting more expensive to pay out.
I’m driving less. How can I save money on insurance?
This is perhaps the most common question on policyholders’ minds these days: I’m working from home and barely driving. How can I get a discount on my auto insurance for that?
There are a few ways you can get an “I barely drive” discount in 2021, some direct and some indirect. Try giving one of these methods a shot:
See if your provider offers a low mileage discount
Some providers will actually offer you a low mileage discount. Google “[your provider] low mileage discount” and see what pops up.
In some cases, providers won’t advertise their low mileage discount, but if you go into your account page and update your annual mileage, your rates may automatically self-adjust for your next policy period. If you’ve already paid upfront for six months of coverage, or if you’d like clarity from your provider on whether you’ll receive a low mileage discount, don’t hesitate to reach out to them and ask.
Enroll in your provider’s telematics program
Another way to indirectly get a low mileage discount is to enroll in your provider’s telematics program. Telematics is just the fancy industry term for a driver monitoring program. Examples include RightTrack® by Liberty Mutual, State Farm® Drive Safe & Save™, and Drivewise from Allstate.
By default, auto insurance providers charge everyone high insurance premiums because they have no idea how risky of a driver you are. But if you enroll in a telematics program and prove how saintly you drive, they’ll slash up to 30% off your premiums. Plus, you typically only have to enroll for one policy period of six months to secure a discount that never expires.
When you enroll in a telematics program, your provider starts monitoring your driving behavior through either an app on your phone or a device that plugs into the OBD-II port in your car (it’s like a hidden USB port near your steering wheel).
The tradeoff to telematics programs are twofold:
- Some drivers (like me) find them intrusive and kinda ruin the fun of driving.
- Drive poorly enough and they may even raise your premiums.
But if you’re barely driving as it is, and when you do you drive safer than the Popemobile, enrolling in a telematics program is a no-brainer way to score a huge discount.
Given recent trends, it’s entirely possible that providers will soon offer a true “Work from Home Discount.” Until then, these are two ways you can save by driving less.
How else can I save money on my car insurance?
Since you probably won’t get another sweeping discount on your premiums this year, here are some tried-and-tested ways you can save on auto insurance regardless of a pandemic:
Find a better rate
The #1 most effective, old-school way to save on auto insurance is simply to find a better rate and switch providers. If you love your current provider and don’t want to switch, hang tight; I have a tip for you in a bit.
If you’ve been with your current provider for more than two years, I have good news and bad news. The bad news is that you may be paying a “loyalty tax” of up to 20%. Insurance companies overcharge longtime customers simply because they can, hoping that you either won’t notice or won’t care. I wish I was making that up, but it’s real and it’s a byproduct of Price Optimization.
The good news is that once you start shopping around, the “loyalty tax” goes away and stays away. On top of that, every provider sees each driver and car combo differently, so you may find shockingly low rates in unexpected places.
Now, what if you find a better rate elsewhere but don’t want to switch providers? You should first know that switching auto insurance providers is crazy easy and only takes a few clicks; no phone calls or messy back-and-forth.
But even still, if you simply like your current provider too much to break up, simply contact them and show them your competing rate. There’s a good shot that they’ll lower your premiums or offer other incentives to get you to stay.
Reconsider how much insurance you really need
Another great way to save on auto insurance is to simply reduce the amount of insurance you have.
Now, I’m not saying you should throw your coverage out the window and put yourself at risk. Rather, I encourage you to carefully reevaluate how much of each type you need, and only to purchase the “Goldilocks” amount that’s perfect for you.
How should you determine how much coverage you need? Spend a few minutes and see if there are any coverage limits or deductibles you can modify to save a little money without exposing yourself to too much risk.
For example, if you no longer commute to work and primarily work from home (and will continue to WFH throughout your policy period), you might consider reevaluating the following coverage:
- Collision. If you barely drive these days, your risk of causing a collision is probably pretty low. Then again, maybe your driving skills are rusty. If you personally feel confident that your overall risk of hitting another car is lower, you might consider a commensurate decrease in your collision coverage.
- Comprehensive. Comprehensive protects your car from damage that occurs outside the context of an accident. Trees falling on your car and natural disasters are the most common examples. So if your car has become a sheltered “garage queen” as a result of the pandemic, you might feel safe lowering or even canceling your comprehensive coverage.
In addition, seriously consider taking a defensive driving course. If you’ve ever gotten an auto insurance quote online, you’ve inevitably run into a question like this:
Have you completed a defensive driving course in the last 3 years?
To be honest, I’ve skipped over this question for years, not thinking twice about it. I mean, aren’t those courses typically court-mandated?
I recently discovered, much to my pleasant surprise, that anyone can take a defensive driving course to score three years of discounts from your auto insurance provider.
For example, State Farm offers a discount of up to 10% for drivers who’ve successfully completed a defensive driving course. If I do the math, a 10% discount on $1,636 in premiums is $164 – multiply that by three years and you have a whopping $492 in savings – all for completing a $60 course that, as an added bonus, makes you a better driver!
Bundle your home and auto together
Another simple old-school tactic to lowering your auto insurance premiums is to bundle your home and auto together. If you have home, condo, or renters insurance with one provider and auto insurance with another, you may be leaving a 10% to 20% discount on the table.
Liberty Mutual comes to mind as perhaps the most generous “bundler” out there. As their site claims, folks who bundle home and auto together with Liberty Mutual end up saving an astounding $842 on average.
Hop on the phone with your current provider
Lastly, one of the best ways to save on your auto insurance premiums is to simply ask your provider to help you find ways.
It may sound a little unintuitive, but insurance agents and customer service reps are happy to help you save money. You can contact them by phone or chat and simply ask them to help you reduce your premiums. It’s a common ask, and they’ll walk you through the following steps:
- Updating major life events and annual mileage estimates.
- Reevaluating your coverage levels.
- Helping you find and maximize discounts.
It was actually my own provider who taught me that there’s never been a better time to secure the Defensive Driver Discount since you don’t have to show up to a physical classroom.
When chatting with your provider you’ll likely find a discount or two that you qualify for without realizing it. After all, providers have so many discounts and programs these days that it can be hard to keep track, and you can often end up leaving money on the table.
Just as an example, Allstate has a bevy of uncommon discounts that I’m sure not every policyholder knows about, including:
- The Premier Plus Discount, for drivers who have no accidents or violations reported for 60 months.
- The teenSMART discount for teen drivers who complete Allstate’s drivers’ ed course.
- The New Car Discount for cars under a year old (perfect if you bought a new whip during the pandemic).
Summary
In 2020, most major insurance providers offered some sort of refund or financial relief to policyholders. And while sweeping refunds have mostly ended, many discount programs have continued, especially for telematics programs. Plus, many providers have adjusted their algorithms to factor in the lesser risk for work-from-home drivers, lowering average rates for the first time in a decade.
Even still, there are quick, concrete ways you can save even more on your insurance today. Shop around, reevaluate your coverage levels, and simply talk to your provider. With so many discounts on offer, it pays to make sure you’re not leaving money on the table!