The coronavirus pandemic has affected how frequently people use their cars. Due to the increase in city lockdowns and travel restrictions, people are using their vehicles less often, and they are starting to question their high car insurance rates. Why should they pay a huge amount for a car they barely use?
Evaluate Current Car Insurance Costs
COVID-19 has affected the way many people use their cars. Some have lost their jobs and no longer commute to work. Others are working remotely from home and do not need to drive to the office. Many have children who do not need rides to school because they are learning at home on their computers. Most social activities that require large gatherings are canceled, so there is nowhere to go.
Car costs can be large part of a family’s budget, and the coronavirus pandemic is making people evaluate how much they spend. A survey from the National Endowment for Financial Education (NEFE) shows that 88% of Americans believe COVID-19 is creating stress in their personal finances. The survey also found that 48% of Americans are worried about their ability to pay bills. Stress over job security and other aspects of the pandemic are making people question all of their spending.
One of the first steps to figuring out how to lower car insurance costs is to see exactly what you are paying for every month. It is not enough to know your overall annual or monthly payment. You need to take a close look at your bill and see how much you are spending on everything from collision coverage to the deductible. Examine each piece of the car insurance payment and discover what you are paying. Then, figure out what you really need if you are driving less during the coronavirus pandemic.
Figure Out How Car Insurance Fits in the Budget
Once you know how much you are paying for car insurance every month, it is time to compare it to your overall budget. By knowing the percentage that car payments represent in your monthly spending, you can figure out how much you can afford and how much you should change. Examining the car insurance this way will help you make better decisions.
You can use a simple budget calculator to figure out what you spend and save. The simple version includes your income, household size and location. It breaks down the budget into broad categories, such as housing, food, transportation and child care. In this case, your car insurance would fall under the larger transportation category. You can compare your costs to the local benchmark to see how much others in the same area spend.
Another option is to use a more complex budget calculator to see how your car insurance costs compare to your overall income and bills on a detailed scale. The complex version breaks down your income and savings into more points. For example, instead of a general transportation category, you can enter the car insurance cost on its own line. Gas and maintenance are calculated separately.
Compare Your Rates to Other Companies
It is important to compare how much you pay for car insurance by looking at rates from different companies. This will show you if you are spending too much or are close to the average. If you discover you are spending more than necessary, you have two options.
Option one is to change to a different, cheaper car insurance company. Option two is to talk to your current car insurance company and ask them to lower your rate based on the information you discovered while doing research. Your company may or may not lower the rate, so you should be prepared to either walk away or stay.
Talk to Your Car Insurance Company
First, you want to ask if the car insurance company is offering any kind of relief due to the coronavirus pandemic. Some companies are removing late fees or extending due dates for payments. Make sure you do not miss one of these opportunities.
Even if your insurance company is not offering special relief packages for the pandemic, you may still be able to find help. Ask about longer grace periods, waiving late fees and payment plans. Some companies let you split payments into more manageable pieces.
Second, make sure you are getting all the discounts you qualify for from the company. Some common discounts include multi-policy, good driver and association savings. Third, see if you can adjust your deductible or make other changes to the policy to save money.
Finally, ask if you can suspend car insurance temporarily. Some companies allow you to stop paying for some or all the coverage if you are not driving the car. Talk with your insurance company to find out if this is an option.