I was recently talking with one of my clients and they asked the following question.
“I am working from home and I am no longer driving into work, however I am spending a lot of money on my auto insurance. Is there a way to lower my auto insurance due to COVID-19.”
I asked her, how much would you say you drive on a weekly basis. She replied maybe 5 to 10 miles per week. This would equal less than 1,000 miles per year which seems to be common place for most people now. I then asked her how many miles is your current auto insurance policy rated for? She laughed at the questions because she had no idea, but then said I think around 15,000 miles.
I explained to her that one of the ways auto insurance carriers come up with their quote is to use your estimated annual mileage. As an insurance agent who works in this industry, this didn’t seem like it would come as a surprise but she said I had no idea. She then told me I should write up a blog on this subject and I promised her I would.
I told her that one way she could lower her auto insurance bill would be to request for the insurance company to reduce her annual mileage. Ask them to lower from her current 15,000 miles down to 5,000 miles per year and have the auto insurance carrier provide you with an updated quote. I would also recommend having your auto insurance agent lower your annual mileage to 3,000 or even 1,000 miles and see if there are any additional savings.
Many auto insurance carriers will have a minimum amount when it comes to your annual mileage which is usually around 5,000 miles. Beyond this annual mileage they may not provide you with any additional savings on your auto insurance premiums. If the pricing is the same between 3,000 and 5,000 then have them set it at 5,000 miles.
Another thing I recommend to her was to consider increasing her comp and collision deductibles. Because she is not driving as much she has a much lower probability of getting into an auto accident. Why pay the higher premiums again if you are not driving.
I don’t recommend lowering your auto insurance limits just in case you do get into a car accident while you are heading to church, or running an errand, you will still be faced with the potential of a significant loss. You will thank me for this recommendation at the time of your loss.
It is important to factor in any trips that you might take this year and any changes to your employers policies. If they are considering having you come back to work anytime soon then making these changes now may not be worth the effort. However in the short term due to COVID-19, this should provide some relief to you related to your auto insurance bill. My wife says I am cheap so I would personally make these changes.
If your driving habits increase in the future, it will be important to reach back out to your auto insurance Agent / Broker and have them increase your annual mileage and potentially lower your auto insurance deductibles back to your prior amounts. Knowing how insurance companies work, if you don’t increase the mileage back up they will make those adjustments for you.
As I mentioned to my client, insurance companies are now able to verify your mileage each time you get an oil change, tire rotation, smog check, and have any other kind of vehicle service performed. Eventually you will see a surprise bill coming your way if you don’t make these adjustments on your own.
Another way to lower your auto insurance bill is to have your local insurance broker provide you with an auto insurance quote and see how other auto insurance carriers compare to yours. Bundling your Home Insurance and Auto Insurance together can also provide you significant savings on your insurance. We would love to provide you with a quote and help you start saving money on your insurance.
Integrity Now Insurance Brokers, Inc.