6 Reasons Your Insurance Rates Didn’t Go Down While You Weren’t Driving
Many of us have been driving a lot less since the COVID lockdowns began in early 2020, and if that’s your case, it might have got you wondering, “Why isn’t my insurance gone down?”.
At the end of the day, driving less means you’re a lot less likely to cause or be involved in an accident, file an insurance claim, or generally cost your insurance company any money.
At the end of the day, driving less means you’re a lot less likely to cause or be involved in an accident, file an insurance claim, or generally cost your insurance company any money.
New research shows that although Americans drove 14% fewer miles during 2020, insurance savings were around 6.2% at most. Here are the top six reasons your insurance didn’t go down:
- There are more people on the road than you might think. In April 2020, driving was down by 70% from January 2020. Nevertheless, by October driving was down just 11%. That means that as far as driving goes, things are getting back to normal relatively fast.
- Emptier roads don’t mean safer roads. Although traffic has gone down since the beginning of the pandemic, traffic deaths per mile driven actually increased by 24.2% from January to October 2020. Can you believe it? you’re now at more risk when you drive than you were when roads were more congested.
- Your mileage savings are affected by other factors, too. Rating factors determine exactly how your policy will be priced. They include age, gender, driving history, and insurance history. That’s why, for example, if your mileage has decreased but you’ve gotten tickets or had an accident in the last year, you’ll likely still see a rate increase.
- Some people report the wrong mileage when they sign up, and insurance companies know it. In fact, Underreported mileage is considered fraud, which costs insurance companies money. Normally, insurers overlook (though they can reject such claims if they find out). But insurance companies nowadays are trying to find ways to save, and one of them is measuring mileage more accurately, and charging accordingly.
- Still haven’t updated your insurance company on your decreased mileage? If your mileage has also dropped dramatically, but you still haven’t reported it to your insurer, there’s no time like the present. By updating your insurance company, you’ll probably save money, and if you don’t, it might be a good time to replace your insurance.
- Have you heard of Usage-Based Insurance? Basically, the usage-based policy is priced on how much you drive. Since these policies don’t take as many rating factors into account, annual mileage can make more of a difference in a UBI policy than in a conventional policy. If you rarely drive, UBI might be a great solution for you.
The good news is that even though the percentage you save for driving less is fairly low, it’s increasing over time. So the more you can stay home or opt for cycling and walking in the future, the more of a break you might get on your policy in the long run.
