How to be sure you’re getting a fair deal on auto insurance during COVID-19 with traffic, accidents down

CLEVELAND, Ohio – You might be feeling pretty good about a rebate or premium cut your auto insurer sent along in the spring after the onset of the coronavirus pandemic. It most likely came unsolicited.

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But have you heard back since then?

Some companies have added more breaks. But many have not, or done little more. Yet accidents remain down sharply, and you may still be driving less.

All this makes now a great time to shop around.

“Other than consumers in California (under state rules there), insurers have largely walked away from providing relief, even though they continue to get the benefit of reduced driving,” said Douglas Heller, who tracks the industry for the Consumer Federation of America, an association of non-profit consumer organizations

“For the most part, drivers in Ohio and around the country are paying premiums based on rate plans developed in 2019 or before when, frankly, the world was different and the roads were more crowded. We’re paying premiums as though the pandemic never happened.”

Accidents in Ohio are down 28% for the period from mid-March near the start of the spring shutdown orders through mid-October, according to data from the Ohio Highway Patrol for all Ohio roads. The sharpest drop was in April, with a decline of 49%, but accidents were also down 23% in August and 25% in September.

The Insurance Information Institute, an industry trade association, estimates that $14 billion has been returned to U.S. auto policy holders, the bulk of it early in the year, the “result of pandemic-related driving patterns.”

The consumer group argues, however, that’s not enough, noting in a September update that, for example, Progressive reported a 177% increase in monthly profits over August 2019, and GEICO reported $2.1 billion in second quarter 2020 earnings before income taxes, up from $393 million in the second quarter of 2012.

So what can you do?

3 ideas for ways to save

“The first thing everyone should do is spend an hour shopping around,” Heller said. “Even in non-pandemic times, most people can find some savings through a bit of shopping. … If your rate as a long-term customer is higher than a rate with someone else as a new customer, then go with the new company.”

But even If you’re not ready to jump companies, there are at least two other things to consider.

If you’re driving far less than usual, tell your insurer. This could result in a rate cut. You very likely answered questions about your driving habits when you first signed up for your policy, driving habits that may be outdated now.

This could be especially true for people working from home. If you’re no longer driving 15 miles each way to and from work, that’s close to 7,500 fewer miles a year, maybe cutting your overall driving in half.

Lastly, consider whether a vehicle tracking device could be right for you. A lot of insurers offer discounts based on your driving habits, electronically tracked. Insurers have an incentive to retain good drivers who are less likely to file claims.

Yes, some people may be uncomfortable with such data landing in private hands. But if you haven’t felt a need to dig deep into your privacy settings on Facebook, or block cookies during your internet browsing, you might want to at least give this a look.

At State Farm, the nation’s biggest auto insurer, those enrolled in its Drive Safe and Save Program save on average 15% to 30%, with savings as high as 50%, spokesman Kevin Gamble said.

The tracking works like this. The owner attaches a small Bluetooth beacon about an inch square to the car, often near the rearview mirror. It’s then linked to the driver’s cell phone with a State Farm app (optional turn off by the driver) to relay things such as miles driven, acceleration, braking and cornering, Gamble said.

In addition to adjusting rates for individuals, the data allowed State Farm to quickly see changing driving habits overall at the onset of the pandemic, Gamble said: “It gives us real time big data.”

State Farm is not alone. There are many available.

For example, Columbus-based Nationwide has two options, each with discounts of at least 10%. One is called called SmartRide. Discounts are tied to miles driven, hard braking, fast acceleration and nighttime driving. The other, SmartMiles, is designed for lower-mileage drivers, with a base rate and a per-mile charge adjusted monthly.

“We’re finding more people are interested in these solutions as they are seeking to control their costs,” spokesman Joe Case said.

One insurer’s 14.3% cut for Ohio going forward

State Farm is one company that has announced multiple rate cuts or give backs.

In March the company issued a statement credit of 25%, called a dividend, through May 31. That amounted to $2 billion. Then it later announced rate cuts worth another $2.2 billion.

This premium cut in Ohio, where it has 1.9 million customers, amounted to 14.3%, spokesman Gamble said, noting that the changes came after State Farm noticed big drops in both miles driven and claims filed.

State Farm is a little different in that it is a mutual company, owned by the policy holders, Gamble noted, adding that “the rates are very much intended to reflect the actual risks, the actual claims.”

But, as noted earlier, such cuts are not uniform across the industry. Here’s a sampling of what some of the other large insurers have done:

* Allstate – Provided credits of 15% for monthly premiums in April and May, but nothing additional since then. “Auto rates are sure to come up when we announce our earnings on Nov. 4 (Wednesday) and talk to investors on the morning of Nov. 5 (Thursday). We can’t address that issue ahead of our full report,” spokesman Ben Tobias said.

* Farmers Insurance provided a 25% credit for premiums on coverage in April and a 15% for May, the last of the changes. “Since then, Farmers data indicates customer driving patterns have begun to trend back to levels originally forecast at the beginning of the year,” spokeswoman Amy Hart said.

* Nationwide – Provided $50 per policy premium refunds for auto policies active as of March 31. That announcement on April 9 was the last from Nationwide on this, spokesman C
ase confirmed, saying “Nationwide is taking the longer view while continuing to monitor consumer driving behaviors and how they impact future miles driven and accident frequencies. We know customers want fair rates and agents are seeking stability.”

* Progressive in April credited personal auto customers 20% of their premiums for two months, totaling $1 billion. No big announcements since then from the Mayfield company, the nation’s third largest auto insurer. But spokesman Jeff Sibel said Progressive has adjusted rates “surgically” on a state-by-state, product-by-product basis. “While we don’t have plans to issue additional policy credits at this time, since the beginning of the pandemic, we have filed rate adjustments in 35 states, including lowering rates for our Ohio personal auto customers,” Sibel said.

Driving and accidents

Several indicators point toward less traffic on Ohio’s roads.

For example, records from the Ohio Department of Taxation show a 9% drop in the amount of gasoline taxed in July over July a year ago, the most recent month for which data is available.

Accidents reported on all Ohio roadways continue to be down, 7,820 during the first half of October versus 11,976 for the same 15 days last year, according to the highway patrol. September accidents totaled 17,231, down from 23,485 in September 2019. August accidents totaled 19,552, down from 25,289. July was 20,639, down from 23,680.

And passenger vehicle miles driven on the Ohio Turnpike were down 15% in September over a year ago, following drops of 22% in August, 24% in July and 31% in June.

“I promise you this, insurance companies are going to have all sorts of explanations on why you need to ignore data from the pandemic in announcing future rates,” the Consumer Federation’s Heller said. “Shop and make sure your rates reflect your current level of driving.”

Rich Exner, data analysis editor, writes cleveland.com’s and The Plain Dealer’s personal finance column – That’s Rich! Follow on Twitter @RichExner.

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