Car insurance: Why the lockdown means you should get a discount
We’re calling on car insurers to pass on cost savings to consumers.
Car insurers have seen a big drop in claims during the Covid-19 lockdown, saving an estimated $100 million. We’re calling on companies to pass these savings on to consumers.
Most of us aren’t driving anywhere near as much as we usually do. As a result, accidents are down and insurance claims have dropped significantly.
However, we’re paying premiums based on the assumption we’re driving as much as normal and that the same risks of having an accident apply.
Time to play fair
Some insurers have acknowledged this isn’t fair. Several big players in the US announced they would pass their cost savings on to customers.
AA Insurance is the first insurer here to publicly state it will do the same.
Last week, the company said the drop in claims had reduced its costs and its car insurance customers would be seeing premium reductions as a result.
The company is also freezing car, home and contents premiums, and setting up a $2 million hardship fund to help customers struggling financially as a result of the lockdown.
Tower Insurance has since announced its car insurance customers will get a portion of premiums refunded as a result of lower claims. It said refunds would be passed on in late May. Further reductions may also be provided if claims continue to fall.
The Medical Assurance Society (MAS) has also said it will pass on savings to car insurance customers. MAS has set up a $2 million relief fund to support customers in hardship.
Vero has also set up a $2 million hardship fund but premiums refunds aren’t currently on the table for its customers.
IAG, which owns the AMI, NZI and State Insurance brands, has yet to confirm whether customers will get discounts. The company said it’s “our intention that any additional benefits arising from the Covid-19 lockdown and travel restrictions will ultimately flow through to our customers”.
What you can do
Ask your insurer about a refund: If you’ve got car insurance, ask your insurer about whether it will reduce premiums given claims have dropped.
Not driving your car? If you’re not driving your vehicle because of the lockdown, you can ask your insurer for a reduction in premiums (even if you’re not driving, you’ll probably still want to insure your vehicle against theft).
Struggling to pay? If you’re experiencing financial hardship, contact your insurer and ask what it can do to help. One way to reduce premiums is to have a higher excess (the excess is the amount you contribute if you need to make a claim).
Review your cover. It’s a good time to review your insurance policies. If you haven’t done this for a while, you may find you’re paying for cover you no longer need because your circumstances have changed.
Shop around: You may be able to save on insurance costs by switching companies. You can check out our latest car insurance survey results here.
Help us keep the pressure on
When big things like the Covid-19 pandemic happen, we all have a role to play in helping each other get through. Our role is to provide independent, expert advice and fearlessly advocate on behalf of all consumers during this uncertain time. Support our work by becoming a member today.
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