call

The Impact of Covid on Car Insurance 2021

With fewer drivers on the road (and fewer auto claims) in 2020, many auto insurance companies issued premium credits and lowered premium rates to help struggling Americans get through the pandemic. However, businesses are reopening and driving patterns are slowly returning to pre-pandemic levels in 2021. With the subsequent and steady rise in auto insurance premiums, some Americans are struggling to keep pace with the cost of car insurance.

Read our tips on how you can stay covered while saving money by making a few adjustments, including lowering your premium for driving fewer miles, dropping add-on coverages and more.

Table of Contents

Covid and Car Insurance Companies in 2021

Premiums are not necessarily skyrocketing — rather, car insurance rates are returning to pre-pandemic levels, according to data from the Bureau of Labor Statistics. Employees are returning to the office, and vaccinated consumers feel more confident about going out. Auto insurance premiums are reflecting the increased number of drivers on the road and higher chances of accidents.

line graph for motor vehicle insurance in U.S. city average

Source: Bureau of Labor Statistics


But what does this mean for Americans who still don't drive as much as they used to or people who are still struggling financially due to the pandemic? Fortunately, auto insurance companies offer flexible pricing determined by how much you actually drive. The less you drive, the more savings in your pocket.

Ways To Save on Auto Insurance

Many covid-specific rebates offered in 2020 are no longer available (more on that later), but there are still ways to save if you're driving on a tight budget.

Research Low-Mileage Discounts

Some insurance companies offer discounts when a driver's mileage is below a certain threshold. State Farm, for example, offers a premium reduction for drivers with an annual mileage under 7,500 miles (for personal use). If you're not driving much, a low-mileage policy can put more money back in your pocket.

Some insurance companies offer discounts when a driver's mileage is below a certain threshold.

Drive Less, Save Money With a Pay-Per-Mile Auto Policy

The cost of a pay per mile insurance policy is typically structured as a daily base rate plus a per-mile rate when you drive. Take the Milewise program by Allstate, for instance. Drivers may pay a $1.50 daily rate plus six cents per mile. If you work from home and only drive for the occasional one or two weekly errands, this can lead to significant savings. Other auto insurers that offer pay-per-mile programs include Metromile, Nationwide, and Liberty Mutual.

Try Telematics

Some insurers have auto policies calculated by telematics — a type of technology that analyzes driving behaviors, including mileage, what times you drive, braking, and acceleration. RightTrack by Liberty Mutual, for example, offers discounts to drivers that drive safely in optimal conditions (e.g., avoids abrupt braking and nighttime driving). 50% of drivers were comfortable with sharing their driving data to adjust their insurance premium, according to a May 2019 survey by Arity.

Raise Your Deductible On Add-Ons

Paying a higher deductible — your out-of-pocket cost for approved claims — generally means lower premiums. If your car gets little use, and you've encountered few to zero incidents (knock on wood), then paying a higher deductible to enjoy cheaper rates may be a good idea. But, if you're accident-prone because you're not the safest driver, then you may want to skip this tip.

Paying a higher deductible — your out-of-pocket cost for approved claims — generally means lower premiums.

Drop Add-on Coverages

Beyond meeting your state-required minimums, dropping add-on coverages is one option for saving money. Just keep in mind that holes in your coverage could lead to more out-of-pocket expenses for non-covered incidents — though, your risk is naturally lower if you're driving less. However, dropping comprehensive coverage for theft could leave you in a predicament if your car is ever stolen. 

Obtain an Affidavit of Non-Use

If you don't plan on driving your car for an extended period, you can obtain an affidavit of non-use (this may be required by your state). Depending on your insurance company, this document may allow you to suspend some or all of your car insurance without entirely canceling your auto policy — useful for avoiding future higher auto insurance premiums due to coverage lapses.

Just be sure to research your state's laws about storing vehicles. In California, for example, your vehicle must be in storage. If it's parked on a street, it must be insured, even if you're not actively using it.

Take Advantage of Bundling

Many insurers offer discounts to customers who bundle multiple insurance products, such as auto and home insurance or auto and life insurance. Often called a "multi-policy discount" an insurance bundle can net you additional coverage while increasing savings. Consumers also enjoy the convenience of having multiple insurance policies housed under a single company.

Compare Insurance Rates

If you're obtaining insurance on a new car, shop around and compare rates. The best auto insurance company can vary by your car model, driving record, and household. Be sure to research incentives for safe drivers or discounts for multi-car households, too.

If you already have an auto insurer, shop around anyway. You can call your insurance provider and attempt to leverage their competitor's pricing to negotiate a lower car insurance premium.

See What You Could Save on Car Insurance

Should I Cancel My Insurance Policy?

Canceling your insurance policy is generally a bad idea if you own a car. Several states require drivers to hold auto insurance to legally drive, whether you're commuting daily to work or buying groceries once a week.

Canceling your insurance policy is generally a bad idea if you own a car.

Even if your car is sitting in its parking slot most days, it's still vulnerable to theft, non-collision damage and weather hazards. A lapse in your insurance coverage can leave you dealing with the full brunt of covering damages or loss — not to mention higher monthly premiums when you decide to re-activate your policy.

If you're struggling financially, reach out to your auto insurer. Many companies will work with their auto insurance customers on an individual basis to offer accommodations, such as a flexible payment plan or billing leniency. Liberty Mutual, for example, waived all late fees for customers late on payments from March 23 to June 15, 2021.

Filing Auto Insurance Claims During Covid

Depending on your insurance company, you can file a claim by calling an insurance agent, using a mobile app or through an online portal. However, you may want to call your insurance company to confirm if your policy covers the claim first. When filing a claim, your insurance company may ask you to upload documents, including photos of the incident and a copy of the police report.

Coronavirus Car Insurance Refunds 

In 2020, several auto insurance companies offered premium credits ranging from 10% to 30% for specific coverage periods. The covid car insurance reduction generally took one of three forms — a credit against the policyholder's next bill, a refund issued via the most recent payment method (e.g., bank account, credit card), or a refund mailed out as a check. Most refunds were issued automatically without any action needed by the policyholder.

Below, we've compiled several auto insurance carriers that have issued covid car insurance refunds.

Covid Car Insurance Refund Details
CompanyRefund

21st Century

25% refund for April 2020 premiums + 15% refund for May 2020 premiums.

Acuity

$50-$100 discount for new and renewal policies effective on and after March 11, 2020

Allstate

15% refund for April, May, and June 2020 premiums.

American Family

10% refund for policyholders with coverage from July 2020 to March 31, 2021, + 5% refund for April and May 2021 premiums.

Amica

10% refund over a period of four months for policies active until the end of 2020.

Auto-Owners

15% refund for April and May 2020 premiums.

CSAA Insurance Group

20% refund for two months of auto premiums for policies active as of April 30, 2020.

Erie

30% refund on a two-month period for auto policies active as of April 2021.

Farmers

25% reduction for April 2020 premiums + 15% reduction for May 2020 premiums.

Geico

15% refund for policies active between April 8, 2020, and Oct. 7, 2020

The Hartford

15% refund for April, May, and June 2020 premiums 

Indian Farm Bureau

$20 refund per vehicle insured

Interinsurance Exchange of the Automobile Club

20% refund on policies active from March 16, 2020, to May 15, 2020, + 10% refund for policies active from Oct. 1, 2020, to Dec. 31, 2020.

Kemper

15% refund on April and May 2020 premiums

Liberty Mutual

15% refund on two months' worth of premiums for auto policies active as of April 2020.

Mercury Insurance

15% refund on personal auto premiums for two months for most states (up to five months in select states).

Nationwide

Flat $50 refund for policies active as of March 31, 2020.

Plymouth Rock

25% premium refund on liability and personal injury protection coverages.

State Farm

25% refund, on average, on premiums between March 20 and May 31, 2020.

Travelers

15% refund on April and May 2020 premiums.

United Services Automobile Association (USAA)

20% premium on March and April 2020 premiums.

Drivers May Be Owed Another Refund

Analysts revealed that the refunds issued in 2020 did not reflect the excess in car insurance premiums that auto insurance companies collected during the pandemic. Therefore, drivers in some states may be due another premium credit from their auto insurance provider in 2021 or 2022.

Drivers in some states may be due another premium credit from their auto insurance provider in 2021 or 2022.

In California, for example, Commissioner Ricardo Lara issued a press release in October 2021, ordering Allstate, Mercury, and CSAA Insurance Exchange to "reimburse California drivers the excess premiums they were charged from the start of the pandemic, or face legal action." California drivers can sign up for email updates through the California Department of Insurance website to stay informed.

Choose the Best Auto Insurance Policy For Your Budget

Whether you drive your car once a week or every day, you'll need auto insurance to meet your state minimum requirements. And with premiums returning to pre-pandemic levels, not all drivers are financially equipped for increased rates. That's why shopping around for car insurance that meets your budget and needs is so important.

While reaching out to insurance companies one by one is one option, it's not the most efficient. Let SmartFinancial save you time and money with side-by-side comparisons from its 200+ insurance company partners. Just enter your zip code below to instantly receive your free auto insurance quotes.

Get a Free Auto Insurance Quote Online Now.

Looking for Auto Insurance?

Compare rates from dozens of companies in less than 3 minutes.