Driving much—or at all—lately?

As Americans remain home to stay safe, traffic volumes have dropped dramatically across the country. Changes in driving habits have resulted in fewer accidents and insurance claims, which will save the insurance industry tens of billions of dollars.

Most of the largest U.S. insurance companies have announced plans to give their auto policyholders some form of relief. These refunds, credits, or premium reductions will total $10.5 billion, according to an estimate by the Insurance Information Institute, an industry trade group.

Some insurers are offering a lot more help than others.

“While we are glad that insurers have begun the process of refunding their sudden, unexpected and unearned windfalls, we can't ignore the fact that not all responses are equal,” said Doug Heller, insurance expert at the Consumer Federation of America (CFA). “It is important to remember that we are not asking insurance companies to be charitable or generous. The need for premium relief is actuarial in nature, and essential to ensuring that companies are not collecting illegally excessive premiums from customers whose risk exposure is not nearly the same now as it was when their policy was first priced.”

Grading Companies' Current Refund Policies

CFA and the Center for Economic Justice (CEJ) graded the 35 largest auto insurers on their response to the coronavirus crisis. Their scores are based on the amount of relief, time period covered, and the way the cost savings will be provided to customers.

“The initial approaches insurance companies have taken range from quite responsible and appropriate, in some cases, to terribly insufficient, in others,” Heller said. “On average, Americans spend about $1,000 to insure each of their vehicles. At a time when so many millions of Americans are suffering from the economic fallout of this crisis, making sure they get back everything they deserve is crucial.”

As of April 12, the top-rated relief programs according to the CFA/CEJ report card were:

  • State Farm (A): An immediate dividend to customers that accounts for about 25 percent of the premium from March 20 through May 31.
  • American Family (A): An immediate $50 refund for each vehicle, equal to an average of 21 percent of the premiums for April and May.
  • Shelter Insurance (B+): Covering 30 percent of customers’ premiums for April and May.
  • Tennessee Farmers (B+): A special payment of approximately 24 percent per vehicle in April and May.
  • Allstate (B): 15 percent refund or credit for April and May.
  • NJ Manufactures (B): 15 percent refund on three months premiums.

(Note: American Family and Allstate were awarded an extra point for leading the industry by taking early action with their refund policies.)

The worst scores went to:

  • Erie (F): It has only promised to cut rates sometime in the future.
  • GEICO (D-): Customers must renew their policies between April 8 and Oct. 7, 2020 to get a 15 percent credit on their new premium.

“The approaches taken by Geico and Erie are not acceptable,” said Bernie Birnbaum, executive director of the Center for Economic Justice. “Immediate relief in the form of a refund or dividend or immediate credit is needed, not a promise of relief in the future.”

CFA and CEJ gave middling grades (Cs) to Amica, Auto-Owners, Farmers, The Hartford, Kemper, Liberty, Mercury, Nationwide, Progressive, Travelers, and USAA.

Dealing with Auto Insurance During This Crisis

When you don’t have enough money to cover all your bills, the car insurance payment doesn’t seem all that urgent—especially, if you’re not driving.

Before you do anything rash—like cancel your policy or let it lapse—call your insurance company and see if you qualify for any of their coronavirus relief programs.

Don’t skip payments or cancel your coverage

If you let your policy lapse, you may pay significantly more when it’s time to buy coverage again. Insurers consider drivers to be a higher risk when there’s a gap in coverage. Remember: If your vehicle is leased or still being financed, you are required to have full insurance coverage, even if you don’t drive that vehicle.

“Auto insurers are trying to help their policyholders during this difficult time by extending due dates and waiving late fees, so they don’t have their policies lapse,” said Loretta Waters, vice president of media relations at the Insurance Information Institute, a trade group.

Consumer Reports contacted 20 insurance companies and found that “all of them are willing to help consumers, but some are being more proactive than others.” While some companies are automatically delaying cancellations and deferring premiums, others require customers to request help.

Don’t cancel your policy if you’re keeping the car, even if you’re using it just for quick trips to the grocery store. All 50 states require drivers to demonstrate financial responsibility for damage or liability caused when they’re behind the wheel. In every state (except New Hampshire) auto insurance is mandatory proof of this responsibility. Get caught driving without insurance and you could be fined or have your driver’s license suspended; you might even face jail time.

A few more reasons why you should think twice before cancelling:

  • Any money you save from cancelling your auto insurance policy for a few months will probably eaten up by higher premiums when you get new coverage.
  • Most states' insurance requirements apply to any registered vehicle, whether you drive it or not.
  • Things can happen to your vehicle even when it’s not going anywhere–especially if it’s parked on the street. Comprehensive coverage (which is optional) provides loss protection for reasons other than crashes.
  • Families with two cars might think it’s a smart move to cancel coverage on one vehicle and use the other. Keep in mind: You’ll lose the multiple car discount, you may be required to return the plates and cancel the registration, and when you put the second car back on the road, your premiums will be significantly higher. If you can’t afford policies on both vehicles, talk to your insurance company and see how they might assist you.

Shop Around

A 25 percent discount off a few months' premiums isn't a terribly generous offer if that company charges twice as much as its competitors.

Shopping for auto insurance isn’t high on the pandemic “to do” list. Most car owners never do it, even in normal times. But if you’re stuck at home with extra time on your hands, spending a few hours collecting rates from insurers likely will pay off: Checkbook’s undercover shoppers collected rates for typical policyholders from the largest insurers serving seven major metro areas and found that most drivers will find they can save hundreds of dollars—over $1,500 a year in some cases—by switching to lower-cost companies.

Most consumers stay with the same company year after year, often concluding that steep discounts they get for their loyalty or not having any speeding tickets or accidents means they won’t find better pricing elsewhere. That’s usually untrue. Although you might be getting a price break from your current company, its competitors will also likely happily offer low prices to lure you away.

Although it’s a bit of a pain to shop for auto insurance, most consumers would agree that spending a few hours to save $1,000 or more every year is worth the effort. Note that you don’t have to wait until your current policy term expires to take advantage of the savings you’d get from a switch. If you change companies, your old insurance company will refund the unused share of your premium.

Review Your Coverage and Deductibles

If you’re driving less, you may be able to save money by adjusting your current coverage.

Ask for a mileage discount. Did you lose your job or start working from home? If so, you’re no longer a commuter. Contact your insurer, tell them the vehicle is only being driven for personal use, and see if they’ll reduce the premiums because of that. You’ve got nothing to lose.

If you’re turned down and working from home becomes the new normal in a few months, contact the company again and push for that discount.

When it comes to insurance, we often pay for coverage we don’t need, simply out of habit. Do you have an older car that you own outright? Maybe it’s time to switch from full coverage to liability only, which will save most drivers hundreds of dollars per year.

Check your deductibles. By taking a high deductible, you’ll save considerably. For example, Checkbook’s research finds that buying a policy with a $1,000 deductible will save, on average, 15 percent per year compared to buying one with a $250 deductible, and taking a $2,000 deductible will save you about 25 percent per year.

Carefully consider the extras. Some optional coverages aren’t worth much, but companies charge a lot for them. Are you paying for rental car insurance reimbursement (for when your car is in the repair shop) or towing? Do you still need these add-ons?

Contributing editor Herb Weisbaum (“The ConsumerMan”) is an Emmy award-winning broadcaster and one of America's top consumer experts. He is also the consumer reporter for KOMO radio in Seattle. You can also find him on Facebook, Twitter, and at ConsumerMan.com.