COVID-19 has changed the face of 2020 , causing shockwaves in the economy. It also sent a large portion of the American workforce into unexpected unemployment. Millions of Americans have been affected by the unprecedented hurricane, and the wildfire season. Despite some improvements in the economy over recent months, many Americans still face hardships. It appears that many people have not reviewed or updated their insurance policies to reflect the new circumstances in 2020.
Bankrate and YouGov partnered to conduct a survey of nearly 3,000 Americans in November to determine the impact of insurance policies on a consumer’s financial well-being. They asked what policyholders had done differently in 2020 to affect their insurance. About 46% of homeowners and 36% for those with auto insurance did not review their 2020 policies. Nearly half (48%) of those with homeowners insurance did not review their 2020 policies. More than one-third (38%) had auto insurance. These people should have reviewed their policies based on lifestyle changes that could have saved them money or caused them to need additional coverage.
There were some interesting trends revealed by the survey about what people did in 2020, which could have had an impact on auto and home policy premiums. Bankrate surveyed 21% of the U.S. adults who improved their credit scores, 15% completed home renovations, and 12% gave up driving to work. 8% adopted a dog, while 7% increased their home security.
It may be a good idea for everyone to go through the policies before they start to change.
2020: The Year of Change
One-third of American adults will use their savings or retirement to pay the bills in 2020, particularly those who are from lower-income households that were already struggling. Pew Research Center reported that 25% of American households were affected by job cuts and layoffs in 2019. This is despite the fact that COVID-19 continues to rise ahead of an expected vaccine.
According to the World Bank the economic impact of the pandemic is already apparent and represents the greatest economic shock the world has suffered in many decades.
People are trying to find ways to save money, as money is tight for many Americans. Many people may not realize the importance of home and auto insurance to their financial portfolio.
How home insurance rates could be affected
Many people consider their home to be their biggest asset and their most expensive. Many people don’t realize how their lifestyles and activities affect home insurance premiums. Simple lifestyle changes, for example, can reduce rates. The 7% of homeowners who didn’t review their policies but added security to their homes would have likely received additional policy discounts from their insurance companies.
Consumers can also lower their insurance costs by improving their credit score. According to 19% of homeowners who responded to the survey, their credit scores improved in 2020. They would be able negotiate a lower premium from their insurance companies going forward.
Home renovations can either have a positive effect or a negative impact on your home insurance premiums . It all depends on what type of work was done to the house. Some renovations like a new roof can lower premiums while others such as adding a swimming pool to the backyard can increase rates. Survey results show that 17% of homeowners who didn’t review their policies but did home renovations could be under- or overinsured.
It’s not surprising that adding pets to your family was a popular activity in 2020. However, it is worth noting that owning specific dog breeds can increase home insurance costs or prevent you from being covered by home insurance providers.
Homeowners should review their policies and talk to their insurance providers to find ways to save money. You should also check to see what activities might require additional insurance so there are no surprises in case of a claim.
How auto insurance rates could be affected
In 2020, the amount of time that people spend on the roads has also changed. The COVID-19 pandemic had already wiped out the roads. Major car insurance companies Allstate, GEICO, and Progressive reported a 30% drop in claims for auto insurance related to bodily injury and damaged property through mid-2020 according to Fitch Ratings. Because of the many vehicles that were grounded at home, some insurance companies offered discounts or refunds to policyholders. Bankrate discovered that many drivers didn’t take advantage of the savings available through the YouGov survey. Even though traffic levels are returning to pre-pandemic levels again, car owners may still have some savings opportunities.
Nearly 40% of Americans who had auto insurance said they hadn’t reviewed their policy. More than 20% of those who hadn’t reviewed their policy thought their credit score had improved. A credit score, similar to home insurance is an important factor when determining auto insurance premiums.
Auto insurance rates can be reduced by working from home. It’s possible to lower auto premiums for the 14% who no longer commute but have not reviewed their policy. Many people who have been working remotely since the pandemic started will continue doing so until 2021. It may be worth contacting your insurance company to ask for a discount.
Who reviews your policy anyway?
Insurance companies employ people to review and evaluate customer policies in order to keep up with current trends and to charge the appropriate rates. These people are not your employees, but work for insurance companies. It is important that you remain vigilant with your policies.
Our research shows that 54% of homeowners had not reviewed their policies since 2020, while 64% of policyholders with auto insurance had. Higher income policyholders were more likely than homeowners to review their home insurance. 60% of policyholders made over $80,000 per year, while 47% of homeowners make less than $40,000. 64% of policyholders aged 18 and older were more likely than those who earn below $40,000.
Reviewing your insurance policies can be beneficial for anyone. However, it is especially useful for those with lower incomes. You can save money on your insurance premiums by involving your provider in key lifestyle changes.
The bottom line
One thing is clear from this survey: policyholders who don’t regularly review their auto and home insurance policies are missing out on opportunities to save money, protect their most valuable assets, and even make a profit. Because life is unpredictable, insurance is an essential part of any financial plan. Even if you don’t take advantage of all the opportunities 2020 offers to save money on your insurance, it’s still possible.
Many insurance companies have made it simpler to manage policies online and via mobile devices. You can also access your policies online to review them, file claims, track progress, and contact customer support for assistance. While 2020 will present new challenges, taking the time to review your auto and home insurance policies can help you prepare for success in 2021.
YouGov Plc was commissioned by Bankrate.com to conduct the survey. YouGov Plc provided all figures, except where noted. The total sample size included 1,968 adults with homeowners insurance and 2,441 individuals with auto insurance. Fieldwork was conducted between November 5 and 6, 2020. The survey was conducted online and met strict quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.