COVID-19 Pandemic: Auto Insurance Premiums Under Pressure and Consumer Relief Measures

Auto Insurance Premiums Face Downward Pressure Due to COVID-19

The COVID-19 pandemic has led to stay-at-home orders and travel restrictions, significantly reducing the number of miles driven. This has put pressure on auto insurers to rebate premiums or provide offsets, according to S&P Global Market Intelligence. While U.S. private auto direct premiums written have not declined by more than 0.3 percent on a year-over-year basis in at least the past two decades, the pandemic risks maintaining this record.

State Regulators and Insurers Take Steps to Aid Consumers

Certain state regulators and auto insurers are now taking steps to give financially burdened consumers additional time to make payments. However, these steps may not be enough as public pressure increases. The Consumer Federation of America has proposed that auto insurers provide monthly offset payments to consumers to avoid what it alleged to represent the "windfall" profits the industry would otherwise produce.

Data Comparison and Useful Advice for Consumers

Data from the Insurance Information Institute shows that the average annual auto insurance premium in the U.S. was $1,056 in 2019. However, due to the pandemic, some insurers have reported a 10-15% reduction in premiums. For consumers, it's crucial to review their auto insurance policies and contact their insurers to discuss potential premium reductions or offsets. Additionally, consumers should ensure they are not overpaying for coverage they no longer need due to reduced driving.