If you’re not driving as much this year, pick up the phone and tell your car insurance company. You might be able to get your payment reduced right away.
Your annual mileage is a factor in how much your car insurance costs, and since driving has greatly reduced since the start of the COVID-19 pandemic, you could be overpaying your auto insurance premium, several experts say.
“Let’s say last year your annual mileage was 12,000 and now this year it’s only going to be 8,000 — that’s a significant change,” says Laura Adams, an insurance expert and host of the “Money Girl” podcast. “Letting them know that you’re driving fewer miles should allow you to pay less.”
Any individual relief you may get that way would be on top of reductions that companies introduced for everybody at the beginning of the pandemic. Those reductions, according to consumer advocates, are not enough when compared to what companies are saving, and insurers could do better by their customers.
People in the U.S. drove 264.2 billion fewer miles during the first half of 2020, down 17% nationally compared to the first half of 2019, according to data from the National Highway Traffic Safety Administration. Fewer cars on the road means fewer accidents, and insurance companies make money by not paying for accidents and other claims.
Insurance companies returned about $14 billion in refunds and credits to auto customers in 2020 because people were driving less, according to a recent statement from the American Property Casualty Insurance Association (APCIA), a trade association for insurance companies.
But a state-by-state analysis by the U.S. Public Interest Research Group, a consumer advocacy organization, shows insurance companies have financially benefited from fewer claims but have barely compensated customers since the start of the pandemic. COVID-19 relief varied by state and insurer, but the majority of insurers gave back less than half of one month’s average premium, the report found. (The report noted that in many states, State Farm, GEICO and USAA provided “better” relief than other insurance companies.)
“When people are struggling financially, every dollar counts,” says Jacob van Cleef, the group’s consumer watchdog associate. “It was underwhelming, to say the least, when you add together what insurance companies were willing to give back.”
Several experts we spoke to say it’s unlikely that more collective relief will come from insurance companies, but insurers may give you a discount to keep you as a customer if you ask.
“Insurers continue to work with policyholders to adjust their policies in 2021,” Mark Sektnan, APCIA’s vice president, says in the statement. “Policyholders are encouraged to communicate any reduction in their driving habits to their insurer to discuss adjustments in premiums if those changes have not already happened automatically.”
That’s why now is the perfect opportunity to take the initiative and ask for a lower car insurance premium if you’re driving less — or at the very least, a discount or two that’s not related to mileage. Jannese Torres-Rodriguez, a personal finance expert and host of the “Yo Quiero Dinero” podcast, says she simply logged onto her insurance company’s online portal, updated her yearly mileage, and immediately saw savings.
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