The truth about pandemic auto insurance rebates

There is lots of news out there about insurance companies offering discounts and rebates to reflect a drop in the frequency and cost of claims. It’s true that insurance companies are doing their best to help their customers save during the crisis, but the maximum savings are only available by removing coverage, and that can be very risky.

The COVID-19/coronavirus pandemic is having a huge impact not only on the health of Canadians, but also on their finances. More than a million Canadians have applied for employment insurance benefits since the start of the pandemic, and about 40% of Canadian households have seen a reduction in their income.

With most Canadians now either off work altogether or working from home during the pandemic, there are much fewer vehicles on the road, and that is expected to lead to a significant reduction in auto insurance claims. Insurers are looking at ways to return some of the resulting savings to their customers, and in so doing, help Canadian families to make ends meet.

But some of the information that has been circulating about massive auto insurance rebates is just not realistic. Here’s a rough breakdown of what savings may be available to you depending on your particular situation.

No longer working but still need to drive – $30-100 in savings

Most Canadians find themselves in this category. You’re not commuting to work, but you can’t just remove coverage from your car, because you still drive it, just much less than usual.

If you call your broker and tell them that you are not commuting daily to work and/or that your estimated annual kilometres is likely to go down significantly, this could decrease your annual premium by up to 5%, depending on what company you’re with.

Car is parked during the pandemic – $150-500 in savings

Some Canadians may not be driving at all during the state of emergency, or maybe a family with two or more vehicles has decided that they don’t need all of them because nobody is driving to work.

If you find that you’re not using your vehicle at all, and don’t expect to for the duration of the pandemic, it may be possible to remove most of the coverage from your vehicle and insure it only for fire and theft while it’s parked. If your vehicle is leased or financed, check with your financing company to make sure this is allowed.

Removing coverage temporarily can be a risky decision, and you need to weigh the potential savings against the risks.

For one thing, you may not be driving, but may rely on your car in case of emergencies. If you remove coverage, you cannot legally drive. There are no exceptions, and if you get in a fender bender or get pulled over, it will cost you dearly. You could be charged with driving without insurance, pay a hefty fine, and pay a lot more for insurance for many years to come.

The other problem with removing coverage is that you are responsible for reinstating it once the pandemic is over. If you forget, or if you don’t call your broker for a few weeks after you start driving, once again, you could be in big trouble.

You may be able to save up to 75% off your premium by removing all but fire and theft coverage from your car, but given that it’s probably only for 3 months, that’s more like 15-20% off your annual premium. For most drivers, that’s a couple hundred bucks.

Pandemic-specific discounts and rebates

The savings discussed above are available at any time (not just for the pandemic) if your driving behaviour changes significantly. Some insurance companies have announced pandemic-specific rebates and discounts, each of which is a little different. To see if your insurance company is offering a specific rebate or discount related to COVID-19, please go to our COVID-19 searchable insurance database, select your insurance company, and under service/coverage, select “Personal auto parked” or “Personal auto no longer used for commuting”.

Mitch works hard to get every customer the best possible price. But we are committed to ensuring that savings don’t come at the expense of the coverage your need. We work with 40+ insurance companies, so it’s very possible that we can find you significant savings from what you’re paying now, without having to reduce your coverage.

If you’re struggling to make ends meet due to the pandemic, and looking to save on auto insurance. Give us a call. We’re here to help.

Al Maggi Writer

Al Maggi is Mitch's senior writer and content editor. Al works closely with other members of the Mitch broker and executive team to make complex insurance topics understandable, and simpler ones interesting and informative.

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