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Here’s everything we know about saving money on car insurance during coronavirus

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Here’s everything we know about saving money on car insurance during coronavirus

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.As daily commutes came to a halt and Americans started driving less, car insurance became more profitable, and less…

Here’s everything we know about saving money on car insurance during coronavirus

Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.

  • As daily commutes came to a halt and Americans started driving less, car insurance became more profitable, and less used, resulting in refunds and discounts from many insurers.
  • Cancelling auto insurance to save money isn’t not usually the right move: It could end up being more expensive in the long run, and isn’t possible for anyone with a financed car.
  • A smarter alternative to cancelling is to reduce your coverage or raise your deductible to lower costs. Ask your insurance company for a payment plan if you’re still struggling to pay. 
  • Check out our partner Savvy — a free tool that lets you compare car insurance quotes in minutes »

Car insurance has had some big changes during the coronavirus pandemic.

In many ways, car insurance is the same as it has always been — the coverage is still the same. But, as insurers see big profits from a drop in accidents, they’re taking unprecedented steps to hep customers affected by coronavirus: in some cases, they’re sending refunds on customers’ monthly premiums, and many insurers are offering help to customers who can’t pay.

Here’s everything you need to know about car insurance during coronavirus:

Should I cancel my car insurance since I’m not driving?

The short answer is no — it could raise your rates later, and leave you unprotected if something unexpected to your car while it’s parked. 

According to data from The Zebra, the cost of car insurance rises between 7% and 12% after a lapse in coverage. Car insurance companies see going without coverage as a risk factor, and your past insurance history is a factor in your pricing. 

If you cancel your coverage, you might also open yourself up to more danger. If your car is stolen, or has something unexpected happen while it’s parked, your car insurance won’t be able to help once it’s cancelled. While things like theft or storm damage would normally be covered by comprehensive coverage, if you’ve dropped that part of your policy and cut back to the state minimum, or have cancelled it entirely, you’ll be on the hook for the whole cost of a replacement car or repairs. 

I have a lease or loan on my car. Can I cancel my policy?

If you don’t own your car outright, you can’t cancel your insurance. Doing so could violate the loan or lease’s terms.

Almost all lenders and leasing companies require that you maintain a certain level of coverage, generally higher than state minimum. You’ll need to prove to them that you have enough car insurance to meet their requirements. Generally, this means that you’ll need to have not just the state minimum liability coverage, but also comprehensive coverage, collision coverage, and anything else that your state requires. 

Auto lenders require this as a protection for themselves — if your car is damaged, the finance company will be able to get enough to recoup lost money. While you can’t cancel your policy, you can raise your deductible (the amount you’ll pay out of pocket if damage happens), which often saves as much as 13%, according to The Zebra.

Can I lower my car insurance rates without cancelling?

Yes, your insurer should be able to help you make your policy cheaper without cancelling it. Asking to raise your deductible or taking off extra coverage types like travel insurance are typically safe ways to save a few dollars each month.

Car insurance companies can also lower your rate if you are driving fewer miles than expected. Call your insurer and see what your options are to lower your rates during the pandemic.

Are car insurance companies refunding customers?

Many car insurance companies are offering refunds, discounted monthly premiums, or credits to car insurance customers. State Farm, Progressive, and Geico, and many smaller insurers are offering refunds. Check your insurance company’s website for more information on your company’s reimbursement plans. 

How much can I expect to see from my insurance company, and when?

The refunds vary in size, how they’ll be delivered, and when funds will be available. The refunds or discounts range from a 25% from Farmers, 21st Century and State Farm, to 15% from GEICO, Liberty Mutual, and Travelers, among other insurers. (See a full list of the ones we’re aware of here.)

Most insurers don’t require any action from customers to get the money. Contact your insurance company for more information about the refunds and how much you can expect. 

Are states requiring refunds from car insurance companies? 

Currently, California is the only state to require car insurance refunds.

California’s insurance commissioner issued an order on April 13 that requires insurers to return money to both business and commercial auto insurance consumers, among other types, according to a report by AP’s Adam Beam. The order gives insurance companies 12o days to return the money to California drivers in the form of a rebate, a refund, a reduction in premiums, or a credit to accounts. 

No other states currently require refunds.

What can I do if I can’t make payments on my car or insurance policy?

Several insurance companies are offering payment plans to people who have lost work or income due to COVID-19. Allstate, Geico, Liberty Mutual, and Farmers are among the companies working with customers who need help paying bills in April and May. Many auto lenders are also helping customers make payments. 

Making arrangements with your insurer or lender will ensure that the late payments won’t leave a mark on your credit report. If you think you’ll have problems making your payments, call your insurance company as soon as possible. Making a plan for repayment could prevent your accounts being reported as late or ending up in collections, which could damage your credit score

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