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Coronavirus Outbreak: What Can I Do With My Car Insurance?

UPDATED: June 30, 2020

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What you need to know...

  • Insurance coverage may lapse or be canceled if premiums aren't paid on time.
  • Many insurance companies are extending grace periods due to coronavirus.
  • Don't cancel your auto insurance to save money, but do look into whether you qualify for hardship programs being offered during the coronavirus outbreak.
  • Switching insurance companies does not guarantee lower premiums but now is a good time to research whether you can cut costs by changing your provider.

The coronavirus pandemic has put a financial strain on many households and people are looking for ways to cut expenses. Drivers, in particular, are asking:

  • "What happens if I can't pay my insurance premium?"
  • "Are insurance companies offering grace periods during the coronavirus outbreak?"
  • "During the Coronavirus outbreak, what can I do with my car insurance to lower premiums?"
  • "Can I switch to a cheaper insurance company during COVID-19?"

The answers to these questions are discussed below. If you have more detailed questions or specific issues related to your coverage, click here to consult with an insurance lawyer.

What usually happens if I can't pay my insurance premium?

As most people know, almost every state requires drivers to have auto insurance with minimum liability coverage limits. If you want to know what your state's minimum auto insurance coverage requirements are, check out FreeAdvice Insurance's State Minimum Liability Coverage Chart.

State Minimum Liability No-Fault State? Minimum PIP Required? Uninsured Motorist Required?
Alabama 20/40/10 No No No
Alaska 50/100/25 No No No
Arizona 15/30/10 No No No
Arkansas 25/50/25 No No No
California 15/30/5 No No No
Colorado 25/50/15 Yes Yes No
Connecticut 20/40/10 No No Yes
Delaware 15/30/5 No Yes No
Florida 10/20/10 Yes Yes No
Georgia 25/50/25 No No No
Hawaii 20/40/10 Yes Yes No
Idaho 25/50/15 No No No
Illinois 20/40/15 No No Yes
Indiana 25/50/10 No No No
Iowa 20/40/15 No No No
Kansas 25/50/10 Yes Yes Yes
Kentucky 25/50/10 Yes Yes No
Louisiana 10/20/10 No No No
Maine 50/100/25 No No Yes
Maryland 20/40/15 No Yes Yes
Massachusetts 20/40/5 Yes Yes Yes
Michigan 20/40/10 Yes Yes No
Minnesota 30/60/10 Yes Yes Yes
Mississippi 10/20/5 No No No
Missouri 25/50/10 No No Yes
Montana 25/50/10 No No No
Nebraska 25/50/25 No No No
Nevada 15/30/10 No No No
New Hampshire 25/50/25 No No Yes
New Jersey 15/30/5 Yes Yes Yes
New Mexico 25/50/10 No No No
New York 25/50/10 Yes Yes Yes
North Carolina 30/60/25 No No No
North Dakota 25/50/25 Yes Yes Yes
Ohio 12.5/25/7.5 No No No
Oklahoma 10/20/10 No No No
Oregon 25/50/10 No Yes Yes
Pennsylvania 15/30/5 Yes No No
Rhode Island 25/50/25 No No Yes
South Carolina 15/30/10 No No Yes
South Dakota 25/50/25 No No Yes
Tennessee 25/50/10 No No No
Texas 20/40/15 No No No
Utah 25/50/15 Yes Yes No
Vermont 25/50/10 No No Yes
Virginia 25/50/20 No No Yes
Washington 25/50/10 No No No
Washington D.C. 25/50/10 No No Yes
West Virginia 20/40/10 No No Yes
Wisconsin 25/50/10 No No Yes
Wyoming 25/50/20 No No No

You also may be contractually required to have insurance if your vehicle is financed.

Failure to make timely car insurance premium payments can result in policy lapse and eventual cancellation. So, the bottom line is, if you can't pay your auto insurance premiums, you won't have coverage, which means you can't legally drive your vehicle.

Driving without insurance is illegal and can be a costly decision. Depending on the circumstances and your state's laws, you can get ticketed for a moving violation, have to pay a fine, have your driver's license suspended or revoked, or worst case, receive a jail sentence if you're caught without car insurance.

Are insurance companies offering grace periods because of coronavirus?

If you need some financial breathing room before making your next premium payment, rest assured that most insurance companies are extending their grace periods during the pandemic.

Carriers are typically providing a 30-day grace period after payment is due without losing coverage, according to Nerdwallet. In March 2020, the California Department of Insurance issued a Notice requesting that all insurance companies provide their California policyholders with at least a 60-day grace period to pay their premiums. You should contact your insurance company as soon as possible if you need a grace period to prevent your policy from lapsing or being canceled.

What can I do with my car insurance to lower premiums during coronavirus?

Many insurance companies have instituted relief or hardship programs to help policyholders with financial or medical issues during coronavirus. Keep in mind that eligibility for these programs is determined by the carrier on a case-by-case basis. So, it's important to talk to your broker about the programs they're offering before you miss a payment. Otherwise, you may not qualify.

Payment Deferral or Forbearance Programs

Some companies have payment deferral or forbearance programs that toll or temporarily stop payments. Be aware that interest will likely accrue during this period. The interest is added back at the end of the deferral or forbearance period, which can significantly increase premiums after the period is over.

Premium Refunds and Credits

As a result of COVID-19, commuters are driving less because of remote work, sheltering in place, and quarantine orders. As a result, many major insurance companies are refunding premiums or giving credits to drivers in certain cases. Take a look at this video for more.

Contact your insurance agent to see what, if any, refunds may be available to you.

Raising Your Deductible or Reducing Coverage

A relatively easy way to reduce your monthly insurance costs is to increase your deductible. You may be able to save up to 10 percent in premium costs by raising your deductible by $500.

Also consider eliminating extra coverage, like travel insurance. Maybe you can take off a family member, like a teen or student driver, who is no longer driving because of the pandemic. Ask your insurer about these and other simple ways to save a few dollars each month on premiums.

Temporary Car Insurance and Pay-As-You-Go Plans

You should also ask about temporary car insurance or pay-as-you-go plans. It's becoming increasingly common for insurance companies to offer short term auto insurance options for customers who don't need standard car insurance. These plans allow you to purchase a policy for a limited time or specified circumstances, or to pay premiums on a mileage-based plan.

Whatever you do, Business Insider says, don't cancel your insurance altogether because it could raise your rates later. Plus, even though you may be driving less, or not at all, you don't want to lose comprehensive coverage. Comprehensive car insurance covers anything that is not collision-related, like weather-related damage, fire, theft, vandalism, and windshield breakage.

Can I switch to a cheaper insurance company because of coronavirus?

Cutting costs by changing your provider could be an option, but switching to another insurance company does not automatically mean lower premiums. That said, US News & World Report advises consumers to use this involuntary downtime as a chance to reassess whether their current insurer is offering the best rates for their needs. You have an opportunity now to review your insurance options and possibly make changes that could save you a significant amount of money.

Before trying to switch to a cheaper insurance company because of COVID-19, you should do the following:

  1. Read your policy from top to bottom. It's a legal document and you should be familiar with the terms before making any changes.
  2. Find out your policy renewal date. If you try to cancel or change your auto insurance plan after the time to renew has passed, you may have to pay a fee or early termination penalty.
  3. Review your bill so you know exactly what you're paying for. While doing so, you may spot ways to cut expenses.
  4. Get competitive auto insurance quotes before you make any moves. Then compare them to your current rates. Maybe renewing with your existing auto insurance company is your cheapest option. You also can use competing quotes as leverage to get your existing carrier to lower your premiums.

As you can see, there are several options you can look into for lowering the cost of your car insurance as a result of the coronavirus outbreak. If you just need a little more time to make your next payment, the easiest thing to do is call your insurer to take advantage of their grace period. Better yet, ask if they're offering premium refunds or credits.

If you're looking for long-term relief, ask about forbearance programs or how you can lower your premiums by changing coverage. For additional questions about how the coronavirus outbreak affects your car insurance, click here to talk to an auto insurance attorney in your area.

References:

  1. https://www.nerdwallet.com/article/insurance/cant-pay-insurance-coronavirus
  2. http://www.insurance.ca.gov/01-consumers/140-catastrophes/Coronavirus.cfm
  3. https://www.businessinsider.com/personal-finance/car-insurance-during-coronavirus-questions-answers-2020-4
  4. https://cars.usnews.com/cars-trucks/car-insurance/coronavirus-and-car-insurance

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