Drummond Laurie Chartered AccountantsSince the announcement of lockdown on 23rd March 2020, there has been an evident shift in driving patterns. Invariably we have become accustomed to far quieter roads, as a direct result of individuals now working from home, or not working at all. Despite our motoring habits changing, our vehicle insurance costs have likely not followed suit.

It is believed that motor car insurance companies have therefore benefitted from surplus car insurance cover, for vehicles which have done little to no mileage, over the past 10 weeks.

This benefit is the result of two pivotal actions:

Fewer vehicles on the road has resulted in fewer accidents and claims; and

Fewer journeys being made in response to “essential travel only” has put a pause/go-slow on odometer mileage readings and consequently, estimated annual mileage on car insurance policies is now likely in excess of reality. Subsequently, premiums are higher than required.

During these difficult financial times, it is an important consideration to ponder whether the vehicle, currently sitting in your driveway and of very little use, is still costing you what it would have done, fully utilised and clocking up miles on work journeys, the school run and visiting friends and family.

Where some car insurance companies have actively acknowledged this change in their customer’s vehicle usage (through providing partial refunds) we have found that many car insurance providers are only considering these changes “on request”, with the customer required to make direct contact with their motor vehicle insurance provider. We would, therefore, urge our clients to consider contacting their car insurers to enquire about any potential cost savings available to them.

Admiral customers were the first to benefit from their car insurer’s actions, in response to the COVID-19 pandemic. Admiral has offered partial refunds of £25 for all vehicles insured on 20th April 2020, with this refund due to be made, to all relevant customers, by the end of May. No further action is required by customers. In addition, recently, LV have also announced their offering of partial refunds of up to £50 for customers who are “struggling financially”, in light of COVID-19. Unfortunately, this is not an automatic refund (and neither a blanket approach to all customers). Customers are required to contact LV directly in order to identify if they qualify for the refund.

As far as partial refunds go, there is little further to report, however, there is an urge for more to be done by car insurance companies. Despite this, many of the mainstream car insurance providers have intimated that they are willing to adjust and reduce premiums, where less mileage is being incurred. These adjustments can often be made on the company’s website, over the phone, or in some cases, on an app. It is important to firstly check that these policy changes can be made without incurring any charges. However, we have found that in most instances, these changes can be made for free. It is also worth considering removing any second drivers, where there is no requirement for these.

In line with the above, specifically, Direct Line/Churchill now provide an online form, for completion, in order for customers to update the car insurance company on current driving behaviour. Information regarding your policy, the vehicle in question and an estimate of mileage now being done, along with personal details, are required when completing the form. Following submission, the company advise that this information will be reviewed, with the customer then informed of the outcome.

Although discreetly disclosed, we are aware that some of the common car insurance providers have also implemented some of the following actions, in response to COVID-19:

  • Reduced pricing to reflect the current situation

  • Enhanced cover for NHS and key workers

  • 3 month deferrals for financial hardship

  • Interest free late payments

  • Waived administration and cancellation fees

It is therefore worthwhile exploring the above facilities, if available, when in contact with your car insurance provider.

Where any changes are made to your policy, as a direct result of COVID-19, it is important to ensure that you update your policy again, following a return to your “normal” driving behaviour.