Will COVID-19 reduce my car insurance rates?

COVID-19 has been a major blow to many industries, even impacting insurance. We have fewer visitors in our homes, fewer travel plans (if any), and many of us are working from home. This has become a huge change for some and a struggle to adapt to our new routines.

But what about insurance? How has it been affected?

In this blog, we explain how your car insurance rates may be affected by the start of the global COVID-19 pandemic.

What we know…

One factor that impacts your rates is how often you use your vehicle. Longer journeys during peak traffic hours can lead to higher premiums, while infrequent use may mean you pay less. From the beginning of 2021, at the height of the COVID-19 pandemic, up to 32% of workers People aged 15 to 69 did most or all of their work from home. This resulted in fewer drivers on the road and less frequent use of our cars, with most of our journeys being for essential purposes only.

In theory, we might be able to reduce our car insurance coverage, since we're not using our vehicles as often as before. You can discuss your options with your broker.

Social distancing may have led to a reduction in claims.

One external factor affecting the cost of your car insurance is the rising cost of insurance claims. Essentially, newer cars are more expensive to repair or replace due to the materials and technology used, making claims increasingly costly. The COVID-19 pandemic led to a reduction in the total number of claims, as people were driving less. However, as public health measures encourage social distancing and working from home, reduced vehicle use may increase and potentially lead insurers to review their rates. Some insurers have even frozen rate increases for the time being.

Some insurance companies offer discounts

This may not be the case with your insurance company, but it doesn't hurt to check. Due to the circumstances, many insurance companies (especially those working with the Insurance Bureau of Canada) are offering discounts as a way to provide relief to those affected by COVID-19 and consumers whose commutes have been shortened or significantly altered. This may not apply to you right now, but it's worth checking with your insurance broker or auto insurance provider to see if you qualify for any discounts.

What your insurer can do

If your situation has been impacted by COVID-19, your insurer may be able to do several things to help reduce your overall costs. These include deferring your monthly payments and spreading the missed payment across your remaining payments, and removing coverage from a vehicle that is no longer being used due to the pandemic (although it is strongly recommended that the policyholder reactivate their coverage once they can return to normal use).

Your insurer may even be able to reclassify your vehicle as "pleasure use only" and offer a discount on your premiums if your annual mileage has been significantly reduced and the vehicle has previously been used for commuting and/or business purposes. Unfortunately, if your vehicle has already been classified as "pleasure use only," this will not apply to you.

It might depend on you

Ultimately, if you're looking for a premium reduction because your daily commute has been impacted by the COVID-19 pandemic, it may be up to you to contact your broker or insurance provider. Panda7 is friendly, accessible, and ready to answer all your questions about COVID-19 and your insurance. It's a great way to start the conversation about a potential discount. Just be sure to have all your car insurance policy information on hand.

At the end of the day

This global pandemic has had a significant impact not only on Canada, but on the world. Due to border closures, travel restrictions, lockdowns, and working from home, our lives have changed in many ways. This presents challenges for those of us struggling to adapt to our suddenly restrictive environments, forcing us to go digital where possible and reduce our travel.

While many other aspects of insurance have been impacted differently, we know that due to workplace measures requiring us to work from home, we are using our vehicles less. Because of this, we may be eligible for discounts or be able to switch our coverage to something less expensive.

A Panda7 broker can help you through these challenging times with your car insurance. Let us take care of it so you can focus on settling into your new home-based work environment.