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How COVID-19 Will Affect Future Auto Insurance Premiums

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COVID-19 has impacted virtually all aspects of life. It's not exactly surprising to learn that your local auto insurance will likely be affected as well. While California hasn't been as affected as other states, such as New York, have insurance premiums tend to change nationwide. Stay-at-home orders and limited facilities reopening have caused people to drive less and spend more time indoors. This has caused cars to stay in garages and spend less time on the road. With fewer claims, auto insurance companies have seen increased profits. Many of them have voluntarily chosen to reward their customers with discounts and relief. However, these benefits may be short-lived. Insurance premiums are always subject to change. Here's how the COVID-19 pandemic may affect future auto insurance premiums.


With driving reduced and fewer people on the road, it may seem like all the news is good for auto insurance holders. After all, insurance companies wouldn't voluntarily be providing relief if they couldn't afford to do so. Unfortunately, not all the news is in favor of drivers. After shelter-in-place orders have ended and life has returned to normal, you can expect these relief efforts to be eliminated and insurance premiums to return to normal.

Driving frequency isn't the only factor that impacts insurance policies. Distracted driving is also an important variable, and when more drivers get back on the road, more distracted drivers do as well. With the popularity of mobile phones, distracted driving has increased substantially. Distraction-related accidents and fatal crashes do affect premiums and how severely or quickly they increase.


Insurance claims make up one of the most crucial factors in determining auto insurance premiums. While people are driving less and fewer people are on the roads, claims are down significantly. Of course, this isn't going to last forever. Once businesses are open and large public events have started up again, you can expect more claims. An increase in insurance premiums would be expected to follow.


Millions of Americans have already filed for unemployment insurance benefits during the COVID-19 pandemic. As policyholders have difficulty paying their bills, such as rent, lease payments, and insurance, companies can expect losses. Obviously, these businesses will find ways to adjust, and this will likely result in increasing premiums to make up the difference.


With low interest rates, investment income is limited for the foreseeable future. Given these reduced returns on investments, insurance providers will likely increase premiums. This allows them to compensate and remain profitable. They may eliminate COVID-19 relief programs to maintain their profits as well.

As you can see, with insurance companies, profits are always a primary issue. These businesses want to see a return on their investments and continue to be profitable. While people aren't driving as much and mileage is limited, this keeps claims at a minimum. Profits are more easily able to be maintained because less money is being spent on claims. Once traffic returns and claims resume, it won't be as easy. Additional factors, such as distracted driving or difficulty with getting a return on other investments, are also key concerns. Current relief programs are at best temporary, and premiums will likely increase in the future. This is to be expected since insurance companies are always looking for ways to ensure profitability.

With car insurance in San Diego, it's a good idea to keep this in mind. While COVID-19 created a period where people are driving less and fewer claims are being made, it won't last forever. Contact California Brokerage Associates at (619) 283-9999 if you have any questions or would like to learn more.