Now that President Joe Biden’s $1,400 stimulus checks are headed for a final vote in Congress, consumer advocates are putting renewed pressure on auto insurance companies to provide some more COVID stimulus cash of their own.
In a set of class-action lawsuits filed in Nevada last month, plaintiffs claim that 10 leading auto insurers have kept premiums unreasonably high during the pandemic, a period when restrictions on business activity and other parts of normal daily life have caused overall driving to drop well below prepandemic levels, according to the U.S. Bureau of Transportation Statistics.
And that’s led to staggering increases in profits for auto insurers, according to research by consumer advocates. Progressive reported an 82% increase in net income, while Geico’s pretax earnings tripled during the second and third quarters of 2020, just to name a couple.
Many insurers already have given customers some discounts on premiums, ranging from small one-time refunds to 15% to 25% reductions on some 2020 monthly bills, according to information contained in the Nevada lawsuits.
“On three occasions in 2020, USAA returned dividends totaling $1.07 billion to all auto insurance policyholders due to fewer drivers on the road because of the ongoing pandemic,” a spokesman for USAA, one of the defendants in the lawsuits, told The Associated Press.
Still, many Americans may be wondering: Why am I paying full price for insurance now, in 2021, when my car still sits in the driveway and my insurance company is still reaping the benefits?
Here’s how you can try to get more relief from your insurer, plus a few other strategies to slash your car insurance bill when money is tight.
Auto insurers thrive during the pandemic
In December, 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?
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
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 nondriving-related losses, like theft.
What if I need even more savings?
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:
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Slash your other insurance bills. By doing some simple comparison shopping using online tools, you can save hundreds on your homeowners insurance and find affordable life insurance.
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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.
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Invest your spare change. Using a popular investing app you can automatically accumulate “change” every time you use your debit card and let the app invest the money for you in a diversified portfolio of stocks, bonds and other reliable investments. You won’t even notice the deposits, but you will notice the returns.
