Car Insurance Post-Pandemic Is Increasing – What You Can Do to Reduce Rates

Like most of us, you probably remember what life was like in the early days of the pandemic. A lot of people lost their jobs, businesses closed, there was a huge shift toward remote work, and the streets were much more empty as authorities advised people to quarantine their homes.

Early on in the pandemic, when money was tight and many people were reeling from losing their livelihood or seeing their income cut way back, many insurers offered temporary payment relief. They refrained from canceling insurance and the use of online claims processing ramped up. Some car insurers even offered partial refunds on premiums.

The reason for this is easy to deduce — fewer cars on the road means fewer opportunities for accidents, and a car sitting at home in the garage is much less likely to get damaged or vandalized. It only makes sense that premiums might drop or get refunded with so little risk to insurers.

Unfortunately, a lot of those relief measures have now expired, and car insurance rates are once again going up.

Why Is Car Insurance Going Up After the Pandemic?

The most obvious reason for the rise in insurance premiums post-pandemic is that people started returning to “normal” — that is to say, they got back in their cars and took to the roads once more. More drivers means more opportunity for accidents, and so the risk of insurance claims goes up accordingly, and that means premiums go up with them.

But that’s not the only reason car insurance premiums are back on the rise. Some drivers have returned to the road and become more distracted and aggressive, leading to a sharp spike in traffic fatalities — over 18% from 2020 to 2021.

Extreme weather has also proven to be a recent issue. As the climate shifts, extreme weather events have become more common. Hurricanes, winter storms, floods and more caused billions of dollars in damage in recent years, leading to bigger payouts from insurance companies.

Another reason car insurance rates are going up: supply chain problems. The pandemic created a rash of supply chain issues that are still affecting businesses worldwide to this day, and it may not be going away anytime soon. This means things like replacement parts for vehicles may be more difficult to get, which leads to inflated prices, which eventually leads right back to the policyholder, who may see their premiums rise.

Some Solutions

But it’s not all gloom and doom when it comes to car insurance rates. State Senator Jacqueline Collins (D-Chicago) has taken a look at the high insurance premiums drivers are paying in Illinois, and she hopes to make reforms that will take a more consumer-centric approach to car insurance. With these reforms, Collins hopes to give the Illinois Department of Insurance more say in how much insurers can charge, and be able to mandate refunds if those insurance rates are deemed excessively high or discriminatory. The recent data has shown that many policyholders overpaid for their insurance, $280 million or more during the pandemic.

There are also some tried-and-true steps consumers can take to try to bring their insurance premiums down. Some of the more common and effective methods include:

• Shop around and compare. You may be needlessly paying too much for car insurance and could get equal or better coverage by looking around for alternatives. According to Ross Martin at the Zebra, this is particularly important for drivers who have poor credit or a tarnished driving record – some companies are simply more forgiving of these minor blemishes.

• Take a defensive driving course.

• Increase your deductible. If you can afford to pay a little more out of pocket for damage to your vehicle, you can lower your yearly premiums by accepting a higher deductible.

• Increase your credit rating. Easier said than done, certainly, but a lot of insurers look at credit rating as a factor when determining premiums.

• Bundling your car insurance with your home or renter’s insurance.

• Looking or asking for discounts such as good student discounts, discounts for safety features and anti-theft devices, discounts for certain kinds of employment (teaching, medicine, etc.)

• If you’re driving very little, switch to a usage-based insurance model.

Another way consumers may find their insurance rates dropping is with the rise of insurtech. More and more insurance companies are using technological methods to assist in settling claims. This includes, but is not limited to:

• Technology such as dashcams, backup cameras, anti-theft devices, and sensors that can help prevent accidents in the first place and collect more accurate data if an accident does occur.

• Remote claims submission, where users can send in photographs and video to provide insurers with visual confirmation of how an accident occurred.

• Image analysis and artificial intelligence technology to make insurance fraud more difficult.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.