Despite measures taken by car insurance companies throughout the pandemic, consumers continue to see a rise in premiums and it’s not sitting well with the millions of insured drivers across America.
In 2020 when the nation was forced to shelter in place, thousands of automobiles found themselves parked in driveways and garages while their owners worked from home. Throughout the pandemic, auto insurers offered refunds due to lower accident claims, but lawmakers and policyholders are arguing that it wasn’t enough.
According to an article written by NPR, insurance companies took in roughly $30 billion in excess revenue that is owed to consumers. Consumer advocacy groups are insisting that on average, consumers received $125 less in refunds than they should have and state regulators did nothing to pressure insurance corporations to issue refunds. However, major trade groups are saying this consumer data is flawed and that insurance companies are well within their rights to keep profits earned.
In 2021, 10 major auto insurance companies were sued under the pretense that premiums remained excessive despite the lower volume of drivers on the road. Insurance corporations including Geico, Allstate, Progressive, and State Farm, among others, have defended that they gave adequate refunds to policyholders without legal intervention. States like California saw the largest decrease of accidents between March 2020 and March 2021 but its consumers still paid higher premiums despite the decline in claims. Illinois is poised to sue Geico under the same pretense.
Insurance companies are fighting back, with the main argument being that they refunded adequately and donated billions of dollars to pandemic relief initiatives. Though it doesn’t appear that those arguments are enough to appease consumers who feel they should have been rewarded better.
Either way, premiums are on the rise again and it’s largely due to the fact that more drivers are on the road and more accident claims are being filed. This is unfortunate for consumers but there are a few things policyholders can do to lessen the impact.
It’s standard that every year, insurance companies raise premiums by roughly 3% and this year will be no different. As a consumer, it never hurts to shop around for a more affordable policy and doing so might prompt an existing company to price match. Consumers are on tight budgets right now and insurers know this. While there’s no guarantee of a lower rate, most companies will make an effort to keep existing policyholders as a customer even if it means offering a cheaper rate.
For consumers who are in a position to upgrade, newer vehicles tend to fetch lower rates because they come equipped with better safety equipment. Things like full-surround airbags and electronic stability control have higher crash test ratings and insurers offer discounts for these features. The more built-in technology a vehicle has, the more discounts are offered. Even if it’s not an option now, it's an incentive for future vehicle purchases.
Take Advantage Of Discounts
Every insurance company out there offers discounts for various components. In addition to those applied for having a vehicle with advanced safety features, discounts can be given for safe driving practices and holding multiple policies. Drivers can also register for a defensive driving course for a discount at many insurance companies.
Most auto insurers offer driver behavior monitoring discounts. Consumers can ask existing companies if there’s a telematics monitoring tool offered and install it in their vehicle. The device, which plugs into a vehicle's onboard computer system, uses GPS and telematics to track driver behavior and reports it to the insurance company. After 6 months of data is tracked, if the reports indicate good driving behaviors, a discount is applied to the premium.
Many policyholders have insurance coverage for more than one service but don’t always have the same carrier for those coverages. Bundling your auto, homeowner’s/renter’s, and life insurance through the same provider can save consumers hundreds of dollars a year.
Regardless of the outcome of the current litigation and despite the country still grappling with inflation and losses of income, consumers are still on the hook for insurance premium increases. Unfortunately, eliminating coverage is not an option and lowering coverage values is not in the consumer's best interest. To buffer the impact, consumers have to fight back with the tools at their disposal. Things like comparing quotes, upgrading vehicles, and improving driving practices can go a long way in helping consumers offset the cost of premium increases.