According to Mark Roemer Oakland, timely car insurance premiums ensure that your car remains protected against any financial loss or damage during a car accident or theft. The insurance company may also provide additional cover for treating any injuries or lost wages. So, it’s pretty important to have car insurance. However, you may wonder why you need to pay your car insurance when you are not even driving your car due to the COVID-19 lockdown. If you are not driving your car, there is no risk of any accidents. Is it just wasting money?
Here are a few ways COVID-19 may impact your car insurance:
1. Premium reduction
The COVID-19 has caused a decline in travel which has affected insurance companies positively due to the less risk of car accidents. As a result, insurance payers have started to demand a reduction in premiums. Many insurance companies such as Liberty Mutual or State Farm have started offering discounts, refunds, or rebates on personal auto insurance in view of the financial crisis that has grasped many people and also to encourage the continuation of their insurance policy.
Whether this solution would work long-term or remain a quick fix is a turning into a debate.
2. Emphasis on usage-based insurance (UBI)
Different people have different driving habits and insurance providers need to make their rates fair for their customers. The COVID-19 is an extreme example, but it has certainly put things into perspective for many people. Insurance companies may start to structure premiums for individual customers depending on their risk level. This is known as usage-based insurance (UBI). It can be determined by –
- Pay How You Drive (PHYD) – This is based on the driving behavior of the customer.
- Pay as You Drive (PAYD) – This is based on how much the customer drives their customer.
Thus, a reduction in traffic doesn’t necessarily mean a reduction in the risk-level of accidents while driving.
3. The usage of digital technology for claim resolution
Social distance has made it more difficult to claim resolutions. Photo estimating tools can be used to help but fall insufficient due to the limited insight they offer. On the other hand, sophisticated mobile telematics solutions can be used to provide real-time crash detection by analyzing motion sensor data and other associated contexts. For example, driving events may include evasive maneuvers, speeding, or distracted driving. All of these would provide clues to the insurance companies to resolve the cause of the accident which would result in quicker claim resolutions.
4. Relaxation on premium payments
Some insurance companies have started to offer a grace period to their customers for paying car insurance. This is in part to improve their goodwill with customers and so that they can remain in accordance with new policies set by the government.
Mark Roemer Oakland suggests that you don’t cancel your car insurance even if you intend to drive rarely during the lockdown. Driving a car without insurance can attract fines, jail time, and license and registration suspension. A better idea is to call your insurance provider to ask for a grace period for paying the premium if you are in a financial pinch.