A Year Like No Other
2020 was a year of unexpected changes. One that may not have gotten the attention it deserved was a decrease in auto insurance rates. With the pandemic forcing many people to work from home, avoid outings, and order delivery instead of going out themselves, miles driven dropped, and some drivers received discounts, rebates, or rate reductions. But will it last? Or will car insurance increase again in 2021?
Limited Driving May Be Here to Stay
It may be premature to talk about a post-pandemic period that hasn’t actually arrived yet, but some experts believe that the reduction in miles driven by Americans will be permanent and remain at around 90% of pre-pandemic levels.
Studies show that like many post-pandemic changes that are expected to stick around, this change was beginning to occur even before 2020, denoting the end of a peak area of driving in America. The changes may even dovetail with each other.
For example, working remotely was trending upward even before people were forced to work from home in 2020, and while many will return to the workplace once the health crisis has passed, some workers (and employers) are happier with the new situation and plan to continue working remotely. More working from home is likely to translate into less driving for many.
How Will Insurance Rates be Affected in 2021?
Does this continuation of lower driving rates mean that insurance rates will also stay down? Maybe. Car insurers have seen fewer accident claims since the start of the pandemic, and they cut drivers in by providing them with insurance relief. Consumer advocates are asking that insurers do the same thing again, as driving rates and accident rates remain lower and consumers continue to struggle financially.
Whether agencies will grant further car insurance rate relief remains unclear. Many auto insurers cover more than just cars, and while car accidents are down, other types of claims, such as damage from climate change-related events, are up. Insurers and experts are saying that they’ll continue to monitor the data and that they encourage customers whose driving habits have changed to reach out for potential discounts.
Who Might See Insurance Increases?
Even if insurance rebates are discontinued or rates drop in general, that doesn’t necessarily mean that all consumers will see an increase; some might even see a rate hike.
The reasons why an auto insurance client might see an increase haven’t changed much. Certain cities might see rate hikes, or individuals may see an increase if they move from a city where insurance is less expensive to a city where it costs more. Drivers who have received tickets or gotten into accidents are likely to see their rates go up, and insured people who have discounts or special rates for special circumstances (such as a student discount) might see them expire or their circumstances change. (Students who graduate will lose the student discount, for example.)
Despite lower driving rates, the ability to drive legally and be protected against accidents and other events remains important to consumers, so agencies should look for ways to help their clients maintain their insurance. Making consumers aware of discounts or programs they may qualify for or adjustments they can make to their policies can help, and insurers should remain responsive to the customers’ concerns.
Being aware of the conditions insurance customers are experiencing and how insurance agencies can help is a good way to support and maintain an agency’s customer base. For more information about how an organization like the American Agents Alliance can help, contact us.