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From transformed school and workplace environments to economic downturn, the aftermath of the COVID-19 pandemic continues to be seen almost everywhere you look. The car insurance industry is no exception to this.
As the economy tries to right itself and consumers return to their pre-pandemic driving habits, the risk for car insurance companies has increased significantly. With rates rising to make up for this added risk, understanding the relationship between COVID and car insurance can help you to save on your annual premium.
Back in 2020, as the rapid spread of the pandemic caused businesses to start operating remotely, car insurance companies began offering drivers discounts and refunds on their premiums because cars were simply not being driven.
In fact, a report conducted by the Deloitte Center for Financial Services in the early days of the pandemic found that pandemic-related lockdowns led to a year-over-year decrease of 40.2% in the miles driven in April of 2020 and a 25.5% drop in May of 2020. With the roads emptying, car insurance rates began to decrease significantly.
However, this trend did not last for long. According to the U.S. Bureau of Labor Statistics, car insurance rates have gone up by over 28% from 2020 to 2023. That is an inflation rate of 8.63% per year. Compare this to the 3.36% increase in car insurance costs from 2017 to 2020, and the difference is clear.
Understanding the relationship between COVID and car insurance rate increases is just the beginning, though. The real question is how to save money on your premiums despite the mounting cost of car insurance.
According to Rate Retriever’s Quarterly Insurance Rates Update, the average cost for car insurance in 2023 is $1,824. Remember, your exact car insurance rate will vary depending on factors such as the state you live in, your driving record, and the make and model of your car.
There are also several methods you can try to save money on your car insurance premium, even in the aftermath of COVID-19. The first step you should take is comparing costs from multiple providers in your area. We can help you here, with our quick and easy quiz, you can compare car insurance rates side by side and find your cheapest option.
Rate Retriever’s report also found that credit score has a significant impact on car insurance rates in all states besides California, Hawaii, and Massachusetts. Knowing this, working to improve your credit rating is another option for reducing your car insurance rates. On average, drivers with excellent credit pay 17% less for car insurance than those with good credit while drivers with poor credit can expect to pay 84% more.
Another tip for lowering your car insurance rates: raise your deductible. Car insurance companies set rates based on the amount of risk a policy introduces to them, and by raising your deductible, you are taking some of that risk away.
Keep in mind, the higher your deductible, the more you will owe out of pocket if you ever need to file a claim with your insurance company. While raising your deductible can save you money on annual premiums, it may end up costing you more in the long run, so this may not be the best option for everyone.
Lastly, you may be able to save money on your car insurance premium by taking a defensive driving course. Several insurance companies offer discounts for policyholders who complete these courses because brushing up on drivers safety knowledge lessens their likelihood of filing a claim.
Car insurance companies determine how much they charge you based on your driver profile. Factors that can impact your rates include:
Read more about the factors that impact your car insurance rate
Switching your car insurance is easy, even if you are in the middle of your current policy.
Here are some helpful tips to consider to switch your car insurance:
The answer to this question depends on where you live and what you would like to cover.
Each state has its own minimum requirements on the type and amount of insurance needed. When you’re trying to determine what and how much car insurance you need, you can start by reviewing your state’s requirements.
Find out what’s required in your state
Once you review your state’s minimum requirements, you may find that you want additional coverage. For example, sometimes owners of new cars want comprehensive coverage to insure their car from natural disasters and vandalism, even though comprehensive coverage isn’t required by their state. To figure out what insurance you want, you can review the different types of insurance to decide what makes the most sense for your situation.
The biggest difference between Rate Retriever and other comparison sites is that we are a free and impartial research tool NOT an insurance marketplace. This means you can’t purchase a policy directly through RateRetriever.com, but you can use our tool to independently research your options and seamlessly connect with the provider you choose.
Unlike other insurance comparison sites, we:
We like to think that Rate Retriever is your insurance companion, not just another insurance comparison site. Our values guide everything we do, which is why we strive to offer transparent, trustworthy insurance tools.
There are many ways you can try to get cheaper car insurance. The first is simply to get quotes from multiple providers. This will help you determine if you’re currently receiving the cheapest rates based on your needs and driver profile. Rate Retriever makes the comparison process easy.
Sometimes, the reason your car insurance is so expensive is due to your driver profile. For example, drivers under 20 years old usually pay more for insurance than more experienced drivers, and drivers with a recent at-fault accident or traffic violation typically pay more.
There are ways to lower the cost of your insurance such as taking a defensive driving course. Check with your provider to see if there are any discounts you qualify for or can reasonably earn.
Rate Retriever works with national and local insurance providers to provide our users with a seamless insurance shopping experience. We may earn a commission from our insurance provider partners when you click on a link, call, or purchase a policy from one of the providers listed on our site. That said, we’re committed to providing you with accurate, bias-free information, and we do not allow our partnerships to limit the results or influence the information we share with you.
We do not sell your personal information, charge you for using our tools, or sell you insurance policies. Additionally, should you choose to purchase a policy from one of our partners, the price you pay will not be adversely affected.
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