Auto Insurance Givebacks
<p><strong>Please include attribution to AutoInsurance.org with this graphic.</strong><br /><br /><a href='https://staging.autoinsurance.org/insurance-givebacks/'><img src='https://staging.autoinsurance.org/landing-page/360-Quote---autoinsurance.org---Insurance-Givebacks.jpg' alt='Insurance Givebacks' width='1000px' border='0' /></a></p></textarea>
Givebacks: Are Consumers Really Getting a Good Deal?
The COVID-19 pandemic radically changed many aspects of American life — including driving habits.
Less Driving, Lower Insurance?
- In March 2020, parts of the U.S. saw a 60% drop in miles driven
- Less driving means fewer
- Low-speed accidents
- Incidents of aggressive acceleration
- Less driving means fewer
- Auto Insurers Giveback
- To help drivers experiencing financial hardship during COVID-19, insurance companies are offering:
- Financial assistance and flexible payment programs
- Penalty-free grace period for late payments
- Paused cancellation due to non-payment
- Waived deductibles for commuting healthcare workers
- To help drivers experiencing financial hardship during COVID-19, insurance companies are offering:
Some of the nation’s biggest insurers have begun refunding auto insurance premiums in response to the sharp decrease in Americans’ driving mileage.
- Auto insurance premiums decreased by up to 25% in spring 2020
- In total, $14 billion was returned to policyholders
- Allstate: More than $1 billion in paybacks
- Geico: $2.5 billion in total refunds
- Progressive: $1 billion in total paybacks
- State Farm: $4.2 billion in savings for customers
- In total, $14 billion was returned to policyholders
Some Americans are driving more — high demand for home delivery and high unemployment have more people turning to gig work apps like DoorDash.
Is a Total Refund Coming?
- A reduction in driving mileage can’t translate to an equal refund percentage
- Multiple variables keep auto insurers from offering complete refunds
- Variation in severity of accidents
- Unpredictable changes in driving habits
- Claims for delayed repairs due to lockdown
- Increased repair costs due to supply chain disruptions
- Multiple variables keep auto insurers from offering complete refunds
- Less driving could mean more insurance claims
- Less traffic leads to more high-speed incidents
- 50% increase in accidents while driving above 70 mph
- 30% increase in the rate of drivers going over 100 mph
- An increase in speeding may lead to
- Increase in claims
- More severe accidents
- Higher cost claims
- Less traffic leads to more high-speed incidents
- Understanding Risk Pools
- Car insurance is required for drivers nationwide — meaning insurers cover drivers with varying levels of risk
- High-risk: Drivers with a history of moving violations, teenagers
- Low-risk: Experienced drivers who have never received a ticket
- Risk pools spread claim costs across more individuals, keeping premiums lower
- An individual driver’s claim may cost more than their premiums
- Other drivers’ premiums make up the difference
- Higher-risk drivers pay higher premiums — driving less may reduce your risk profile and provide an opportunity for savings
- Car insurance is required for drivers nationwide — meaning insurers cover drivers with varying levels of risk
94% of car accidents are caused by human error — speeding, driving under the influence, distraction, and drowsiness.
Could autonomous vehicles help decrease car accidents and lower auto insurance premiums?
Autonomous Driving & Auto Insurance
- In the future, increased autonomous vehicles may lead to
- Fewer insurance claims
- Lower premiums
- Shift in liability
- Who is responsible for autonomous driving?
- Liability will shift from the driver to the vehicle
- Driver behavior and claim history will be irrelevant
- New calculations for determining risk
- Do Autonomous Vehicles Need Insurance?
6% of accidents are caused by a vehicle malfunction, environment, and other reasons beyond the driver’s control.
- Determining fault in an autonomous vehicle accident is complex
- If the driver is in control, traditional auto insurance will prevail
- BUT, if autonomous technology is engaged,
- Should the manufacturer be liable for all accidents?
- Or, should the driver be liable for failing to intervene?
- The simplest solution may be no fault or split fault personal auto insurance
- A Simpler Approach To Insurance
- Rather than personal auto insurance, autonomous vehicle manufacturers may start offering their own insurance option
- Manufacturer-issued insurance would eliminate the need to determine if the vehicle or driver is liable
- Manufacturers would be able to
- Compute the exact probability of accidents
- Offer lower insurance premiums
- Decrease premiums with each new release or upgrade
- Whatever the details, the adoption of autonomous vehicles will reduce the risk profile of many drivers
- By 2035, the adoption of autonomous vehicles could reduce auto insurance premiums by $25 billion