The Importance of Paying for Car Insurance During the COVID-19 Pandemic

Car model stands on top of piles of corns

A lapse in car insurance coverage could end up costing drivers more than they save by avoiding payment of premiums during the pandemic. With travel and employment rates experiencing significant losses as a direct result of pandemic lockdowns, it may appear enticing to Americans to allow car insurance payments to lapse. While this decision may lead to immediate monthly savings, the long term effects of a lapse in car insurance can be costly. Drivers could face higher future premiums due to lapses in coverage or defaulting on monthly premiums. Additionally, drivers could face legal fines if they are pulled over while driving without insurance, and significant costs for damages if an accident occurs while motorists are uninsured. There are safer solutions, such as changing or lowering coverage, that can assist motorists in lowering their monthly expenses while still maintaining car insurance coverage. 

Why Are Drivers Choosing To Default On Car Insurance Payments?

With travel and employment rates dropping significantly during the pandemic, many motorists are choosing to default on car insurance payments to make ends meet. Unemployment rates reached unprecedented levels (14%) at the peak of the pandemic in April, and have declined to a still greatly increased degree of 6.9 % by October. In addition, travel spending is down 41-45% compared to rates in 2019. Reductions in household incomes across America presents consumers with a unique array of tough decisions during the pandemic. One of these decisions may be whether to maintain car insurance coverage or forgo seemingly unnecessary coverage in lieu of extra cash flow. The decision to forgo car insurance payments may also be influenced by work from home policies instituted by many businesses and school systems, reducing the amount of daily travel in the lives of consumers. Though it may seem like an ideal temporary solution, choosing not to pay premiums cancels a motorist’s coverage, putting them at risk for an entirely new set of unexpected expenses. 

What Are The Dangers Motorists Face While Uninsured?

When car insurance premiums go unpaid, drivers are no longer covered under the defaulted insurance plan. Lapses in coverage put motorists at risk of incurring higher expenses, even while their vehicle remains safely parked. These expenses are seen when a driver decides to reinstate coverage, as many car insurance companies charge higher premiums when a lapse in coverage is present. In addition, consumers may be considered a higher risk investment for insurance companies when he or she has defaulted on payments in the past, leading to higher monthly rates as well.  

Higher future premiums are not the only risk uninsured drivers face. Even with the safest driving habits, accidents can happen. Research shows that the COVID-19 shutdown has potentially influenced driver behavior. In addition to increased anxiety and stress impacting driver behavior, open roads have led to increased speed and distracted driving behaviors. When an accident occurs without insurance, drivers may be forced to pay out of pocket for their losses – even if they are not at fault.  

Safer Alternatives To Dropping Coverage

Safer solutions exist for consumers who need to lower the monthly cost of car insurance without risking a lapse in coverage. One of these options is to simply reduce or change the amount of coverage.  If a vehicle is to remain parked indefinitely, storage coverage may be an option. This will help consumers to avoid a lapse in coverage while still saving up to 80% on premiums. reducing coverage from comprehensive to minimum liability may be an ideal choice for consumers who are simply driving less during the pandemic. With some insurance companies, telematic devices can be installed to track a motorist’s travel behavior more accurately and potentially reduce the overall cost of premiums. Additional solutions may exist for motorists affected by the COVID-19 pandemic, such as a pause in cancelations due to nonpayment, flexible payment plans, and grace periods for nonpayment. 

What To Do If An Accident Occurs 

When an auto accident occurs, drivers should remain at the scene, call authorities, and seek medical attention if necessary. If possible, drivers should take an accurate record of the accident, including well lit, clearly visible pictures. It is important for drivers to communicate any potential injuries, as well as an accurate sequence of events, to authorities to the best of their ability. If one or both motorists are insured, the insurance company’s contact information should be exchanged. The accident report number is an additional vital piece of information for drivers to obtain. Communicating with an auto accident attorney can help ensure that drivers’ rights are protected following an accident.