During the COVID-19 pandemic, reduced driving and insurance costs have been a hot topic. Many Mainers are driving less. Why haven’t their car insurance rates dropped? It’s more complicated than you might think. But there are ways to keep your car insurance costs in check.
Why Maine Insurance Rates Haven’t Dropped
Insurance is Slow and Steady
We count on insurance companies to be dependable and stable. We need to know they’ll be able to pay claims in the future. So it’s no surprise that insurance companies aren’t built to react to fast trends. Especially those that may not last.
We want stable insurance prices. The whole purpose of insurance is to avoid a large loss by paying a small cost (premium). Some years, disasters cause insurance companies lose a lot of money. Other times, claims are low. Insurers bank our premiums in those times to pay for the bad ones.
Insurers Have No Experience with COVID
In insurance, data rules. Insurance companies charge premiums based on expected claims. They hire smart math nerds who use decades of data to find the proper rates. Consumers want the lowest possible price. Regulators and stakeholders want rates high enough to make a profit pay future claims.
Historical data didn’t help much during COVID. Americans drove less as people telecommuted and stayed close to home. Nothing was normal.
But overall mileage doesn’t tell the whole story. Essential workers continued to commute as usual (thank you, essential workers!). Law enforcement and highway construction crews noticed increased speeds due to less traffic. That led to more serious crashes and injuries.
COVID Auto Insurance Rebates in Maine
Remember how quiet the roads were in the early days of the pandemic? It was a very uncertain time for the economy. Many people were out of work, and small businesses feared that they’d have to close.
In response, most American auto insurance companies refunded some premium to policyholders in 2020. This was an unprecedented response by insurance companies. By law, rebating of premiums is illegal. But state insurance departments approved exceptions.
But it wasn’t easy. Insurance companies’ billing systems weren’t programmed to rebate money to customers. It was difficult for many of them to calculate and distribute the refunds.
Although the insurance industry returned $10 billion to US consumers, individual refunds were quite small. The public hardly noticed them. Between the underwhelming public response and the cost of the workarounds, insurers didn’t think the rebates were that valuable. We don’t expect rebates again anytime soon.
Reduce Your Auto Insurance Costs When Driving Less
OK, so car insurance companies aren’t slashing rates in response to COVID. And they’re probably not going to refund premium this year. You still have control over your own policy. Here are some adjustments you can make.
Be Sure You’re Properly Rated
Does your policy reflect your actual driving? If you’re working from home, retired or unemployed, maybe not. Check the drivers listed on your policy. Are any of them no longer at home? Do they now have their own insurance?
Check Your Collision Coverage
Do you have an older car that isn’t worth much? Is it rarely driven? Do you have a vehicle that’s completely off the road? Consider removing collision coverage, at least during COVID. Just remember to add it back if the situation changes.
Prove You’re Driving Less
Even “slow and steady” insurance is changing with the times. Several now offer “usage based insurance”. Commonly advertised brands include Progressive Snapshot, Travelers Intellidrive and Drivewise from Allstate.
With usage-based insurance, you allow the insurance company to customize your rate in exchange for an up-front discount. You’ll need a smartphone and the insurance company’s app. Your final price varies depending on how, how much and when you drive. It can be lower or higher than the initial discount.
Safeco Insurance offers a twist: a “low mileage discount” that doesn’t use a real-time monitor. You simply verify your previous year’s mileage to continue to earn their discount. Safeco also has a usage-based mobile app option.
Want to know more about these options? Ask a Noyes Hall & Allen agent.
Shop Your Auto Insurance
If those cost-saving measures don’t work for you, you can always compare rates with other insurance companies. Live in Greater Portland Maine? You can get up to 5 Maine auto insurance quotes in 10 minutes on our website. Or call a Noyes Hall & Allen agent in South Portland for quotes at 207-799-5541.
We offer the choice of more than a dozen insurers, so we can search the market for the best value. We’re independent and committed to you.