You may have seen some posts on social media about how others are seeing up to a 20% discount on their monthly premiums—and are wondering, “Will I get a COVID-19 discount on my car insurance?”
The short answer? Maybe!
It is important to first understand why these discounts are being offered by car insurance providers and if there are special circumstances that apply.
To start, some providers of car insurance are offering the discount to all of their policyholders, regardless of how they have been affected financially by the COVID-19 pandemic. Why can’t they always offer this lower rate? Well, they are able to offer lower rates because fewer cars are on the road. With many people choosing to stay indoors, postpone trips, or working from home, the roads are less busy—and therefore less of a risk for claims. This means savings for policyholders—which are rightfully being passed on to you.
Other car insurance providers may be offering discounted rates or extended payment options for individuals who lost their job or had a cut in hours. Others are extending the offer to policyholders who are considered essential employees as a way of saying thank you.
Drivers may also be able to qualify for lower rates (not just a temporary discount) by shopping around with your current or other car insurance carriers. The mileage use of your vehicle can impact your annual or bi-annual rate (and, thus, your monthly premium). Less mileage can equal savings, so contact your insurance agent to discuss your decrease in mileage.
Getting up to 20% off your car insurance for the next month or two may sound awesome, but before you start to celebrate, be sure to check the fine print. First, ensure you will qualify for the discount. Next, find out how the insurance discount will actually be applied to your premium.
Will your monthly amount be discounted, or will your annual or bi-annual rate receive a credit? Some carriers are issuing an account credit at the end of the month starting April 30th. The credit is applied to your account balance first, if there is one. If you pay your premium in large sums, annually or every 6 months, that credit balance will be reimbursed to you (or, possibly, offered to be applied to your renewal balance).
If you pay your annual or bi-annual premium in monthly installments, then you likely have a balance on your account. The COVID-19 discount is applied to this balance and may or may not affect your monthly premium right away or even significantly.
If you are set to renew soon, you may see a slight drop in your premium starting in May (since the credit will go in at the end of April).
If you recently renewed your policy, you may not see much of a drop in your premium as the credit is applied to your balance and your monthly premium is calculated by taking that balance and splitting it over the number of months in your policy (usually 6 or 12 months).
Contact Your Car Insurance Agent
Know how your policy premiums are going to be affected by contacting your insurance agent. Don’t rely on social media posts and speculation. And, of course, if there is any change to your circumstances (whether a significant drop in mileage or financial issues) contact your car insurance agent to review all of your options.