If the pandemic forced you to drive less, it is worth taking a look at this type of car insurance. (iStock)
The pandemic had a major impact on Americans’ driving habits in 2020. With shelter applications in place, countless closed deals and the prevalence of work at home deals, Americans spent less time on the road than ever.
In fact, according to the Federal Highway Administration, the average number of kilometers traveled dropped by 41% at one point. To compensate for the drop, many auto insurers have started offering discounts – usually 10-15% of the monthly premium – to policyholders across the country.
“COVID-19 means people are driving a lot less,” said Donald Light, Celent’s North American Director of Property / Casual Practices. “Lucky people start working from home, and unhappy people have no job to drive to. And there is much less driving to the movies, dining or shopping. “
The decrease in driving has also spurred an increase in interest in use-based car insurance – a type of non-traditional policy that allows the driver to pay based on how much he drives, not a flat fee based on guests. According to a study by Allied Market Research, the use-based insurance market is expected to jump another 25% by 2027.
Is it something that you should consider for your vehicles? If so, you can access Credible to compare quotes online for free and see what coverage makes sense for you.
What is usage-based insurance?
Traditional auto insurance policies use a fixed rate premium system. When applying for the policy, you will give the insurer an estimate of how many kilometers you drive – a week, a month or throughout the year. The insurer then uses this information, as well as other factors such as your age, driving record, credit score, location and more, to define your premium.
UBI policies are paid per mile in most cases. So instead of basing your rate on how many miles you expect to drive in the premium period, it is based only on the miles you actually measure on the road. These miles are usually tracked using a mobile app or some type of device in the vehicle.
For drivers who don’t drive often, this approach can mean big savings.
“The savings can be significant,” said Rick Chen, a spokesman for insurance company Metromile. “More than 124 million Americans drive 30 miles or less or just a few days a week, which is considered low mileage in the insurance industry.”
Both UBI and traditional options can include any number of coverages – things like collision, comprehensive, underinsured driver, etc. The difference is simply how your premium is calculated. Find out more about how auto insurance works and is priced Credibly.
DOES YOUR CREDIT SCORE AFFECT INSURANCE FEES?
How to choose the right auto insurance policy
No two auto insurance policies are the same, so regardless of whether you choose use-based insurance or a traditional auto insurance policy, shopping is essential.
To start, use a tool like Credible to explore prices from multiple insurers at the same time. When comparing your options, be sure to look at the prize and also how often it wins. Some insurers have annual premiums, while others have semi-annual or monthly premiums. Make sure to compare apples to apples.
You should also consider items such as the deductible – how much you will pay per claim – and the coverage limits for each policy. Finally, also check the insurer’s assessments. Make sure that the claims process is easy and that policyholders are satisfied with your service.
THIS IS THE BEST WAY TO REDUCE THE COSTS OF YOUR CAR INSURANCE
What are the other auto insurance options?
In addition to traditional, usage-based auto insurance policies, there is sometimes a third option to choose from: insurance based on how you drive. It is essentially a variation of usage-based insurance, with only more nuances involved.
“The insurance company monitors the safety with which a person is driving – speed, rapid acceleration, sudden braking, etc. – through the use of a dongle that connects to a car’s performance monitoring systems or a smartphone application, ”said Light. “If you are a very safe driver, you may get a 10% to 20% reduction in the premium.”
According to Light, many of the leading insurers offer these policy options and can be a smart way to reduce your premiums if you are a safe driver.
Of course, not so safe driving habits can do the opposite. If you choose this type of policy, it is important to drive carefully and follow all traffic laws.
If the pandemic has changed your driving habits, it may be time to review your car insurance policy – as well as the premium you are paying. Use a tool like Credible to explore your auto insurance options and compare quotes today.
3 WAYS TO GET CHEAPER CAR INSURANCE RATE