When will insurance rates dip from fewer losses during COVID-19?

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COVID-19 has taken a lot from many of us — time with friends and extended family, vacations, a “normal” work life. But it’s also given us many gifts, including more time with those in our immediate household, more home-cooked meals, and no-longer-existent commutes. 

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One financial benefit of having to stay home for the past year-and-a-half is that many drivers saw a one-time rebate last year on their car insurance premiums. According to a 2020 LowestRates.ca report, driving less — or not at all —  saved some drivers up to 96 per cent .

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When will insurance rates dip from fewer losses during COVID-19? Back to video

With fewer drivers on the road, it’s safe to assume there were fewer collisions and as a result, fewer auto insurance claims made over the course of the year.

As a result of that reality, when can drivers expect to see a dip in their 2021 car insurance rates ?

Rates dipped but discounts are determined on an individual basis 

Internal data from the LowestRates.ca Auto Insurance Price Index, which will be released later this month, reveal that the average car insurance premium in Ontario decreased by 5 per cent in the first quarter of 2021 when compared to the same time last year. On a quarter-to-quarter basis, the average premium dropped by 10 per cent in Q1 of this year when compared to Q4 in 2020.

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There are several factors contributing to this decrease, including rebates for new customers, more insurance companies willing to write policies, and more customers opting for telematics. But one of the most impactful factors is the change in driving behaviour brought on by the pandemic.

“There have been fewer drivers on the road and therefore fewer accidents, meaning fewer claims for these insurance companies to pay out,” says Sara Caruana, service team leader at DirectRate.ca . 

Several insurance companies have already announced their upcoming savings for customers, while others continue to make announcements via bulletins to those in the industry. 

“Taking a look at some recent bulletins, some of the changes are taking place as soon as June [for renewals],” says Caruana. “Effective immediately people should start to see some relief.”

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However, she says it’s important to note that the savings are based on an individual driver’s overall record. For example, if someone had an at-fault collision last year and they don’t have accident forgiveness coverage, that person would still see an increase this year at renewal, even with the overall rate decrease that their particular insurance company might be offering. 

“It’s not going to be everyone seeing a broad percentage decrease,” says Caruana. “It is still specific to each individual driver.”

While Caruana notes that these decreases in rates are not required by the government, many insurance providers are taking it upon themselves to give some relief to their consumers. She says that new policies have seen decreased rates since May, while those renewing their policies this year should notice a decrease starting in June and July. 

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How to find out if your car insurance rates are decreasing

Most consumers should notice a drop in rates automatically, but in some cases — such as those with CAA Insurance — consumers will need to call their insurance provider directly if they want to take advantage of extended, backdated discounts. 

“It’s really important for the consumer to reach out, keep an eye on their policy documents, and on emails from their insurance provider,” says Caruana. “When in doubt, they can reach out to their broker’s office to triple check.” 

Caruana says that if consumers are curious about a particular company’s relief efforts, they can easily find information on its website. “It’s clear,” she says, “They don’t have to go digging for it.”

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Especially over the next 12 months, Caruana says consumers should watch out for any documentation or communication from the insurance company.

Will rate decreases continue through 2022 as more people stay off the roads in 2021? Caruana says it’s definitely a possibility. 

“That will be truly based on the statistics for this year,” she says. “Although more people are continuing to work from home, it doesn’t mean that on that once-a-week day where we go to get groceries, we’re not getting in an accident.”

With high hopes, Caruana adds, “Chances are, with more cars off the road, the less chance there is of accidents. Hopefully we do continue on this trend of slight reduction.”

LowestRates.ca is a free and independent rate comparison website that allows Canadians to compare rates from 75+ providers for various financial products, such as auto and home insurance, mortgages, and credit cards.