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How to save money on car insurance during the coronavirus outbreak

Twenty/20

If you're trying to find at least a small silver lining to the coronavirus pandemic, here's something: You may get a partial refund on your car insurance if you're stuck at home.

Some car insurance companies say they are seeing savings as their customers are driving less and, as a result, filing fewer claims. Allstate (which includes subsidiaries Esurance and Encompass) and American Family Insurance have both announced they are returning those savings to consumers in the form of refunds and lower premiums.

Allstate is giving its customers 15% off in April and May, and American Family Insurance is returning $50 per vehicle to its customers.

The situation is "unprecedented," says Nicole Beck, a licensed insurance agent and director of communications at The Zebra, an insurance comparison site. Beck says that it's likely other insurers will follow suit in the weeks ahead.

Driving less can mean lower insurance costs

Staying home during the pandemic could help you reduce your premiums.

The average driver in the U.S. pays $941 per year for car insurance, according to ValuePenguin. But costs vary widely depending on factors like where you live, your age, driving history, and what type of car you drive.

Another component: How much you drive. If you're following state orders to stay at home, you could save by reducing the annual mileage on your policy.

The average driver saves "around 6% per year" by cutting their annual mileage in half, says Beck. Depending on where you live, the savings could be more significant: "In California, you could save up to 32%."

Insurers "take into account the whole picture, not just the mileage," says Loretta Worters, a spokeswoman for the Insurance Information Institute.

Your risk profile could also change if your car is spending more time in your suburban garage than parked on city streets near your office or a public park-and-ride. "Insurance rates are responsive to changes — they're continually adjusted," Worters says.

How to save money on car insurance

To make the most of auto insurance savings opportunities while you're at home, here are three things you can do — and one you shouldn't.

Reach out to your insurer. Ask about potential discounts and whether your risk profile has changed as a result of working from home. It's also important to call if you're struggling to pay bills as a result of the pandemic. Many carriers are already waiving fees and allowing for more time to make premium payments due to the coronavirus, but in most cases, you'll need to ask for wiggle room in order to get it.

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Consider changing your coverage options. Ask about switching to a "pay-per-mile" or "usage-based" policy, under which drivers pay more based on their mileage than they do under traditional plans, Beck says. If you're not commuting or if you don't drive your car much to begin with, that could help you save. Keep in mind that your usage and your bill may change once you resume your typical commute.

Shop around. Experts say you should shop around for auto insurance annually. That's a good financial to-do to tackle while you're home. Doing so could save you hundreds of dollars a year.

Don't cancel your policy. Even if you're not using your car, don't cancel your policy — that coverage gap could end up costing you more down the road. "It's tempting to cancel your coverage right now," says Beck. "But you'll see a 7%-12% increase in price" when you go to reinstate your policy. That's because insurers take "continuous coverage" into account when setting rates.

For that reason, work with your insurer rather than cutting off your insurance completely.

If you want to make sure you're not missing out on potential savings, though, Worters says, start with one move: "Call your insurer."

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