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The Pandemic, Driving Patterns, and Rebates

The pandemic had almost everyone driving less. Insurance companies had record profits, as less driving translated into fewer accidents. A few companies gave a bit of a rebate back to customers (mine was less than $20!).

Earlier this month, the Consumer Federation of America and the Center for Economic Justice declared that insurers collected $42 billion in excess premiums last year while providing only $13 billion in discounts and rebates.(Yahoo Finance)

Despite lobbying by the CFA, only California regulators have stepped in to try to get more money returned to customers. In other states, it is going to the courts in the form of class action suits. All of this as traffic returns to more normal levels and patterns, and insurance companies are filing with state regulators to increase rates! If you didn’t get any money back from your provider, or not enough, try calling them, and make sure you note how your driving behavior was (and maybe still is) different. You can also shop around for a new policy. If you are really not driving at all, the Yahoo article suggests you consider suspending your policy, but this carries more risk than potential reward.

One of those reasons: Auto thefts increased over 9% in 2020 over 2019. The pandemic was suggested as the cause (too many younger people with nothing to do and nowhere to go.) And auto break-ins were high too, so make sure that you have “Comprehensive” coverage if you want to be insured against theft. Even if your car is stolen, you will only be out your deductible. (Fox News)

Who insures Self-Driving Cars?

The technology of driving is progressing from gas to hybrid to electric to autonomous vehicles. As vehicles start driving themselves, who exactly should be liable if something goes wrong? Should it be the owner of the car (who wasn’t actually driving), or the manufacturer of the vehicle? Do both parties need insurance? Will every incident require a post-accident investigation to figure out if the vehicle had an issue? What would this new type of insurance look like, and who would provide it? Apparently, the future is now as a few players are jumping into this pool. (Venture Beat)

Components of Auto Insurance and Link to Umbrella Insurance

White Coat Investor (geared towards doctors, but very practical information for all) goes into great detail explaining all of the different components of an auto insurance policy, suggesting how to figure out which parts you need, and what amounts of coverage you might want in each category. Of course, the state you live in may determine some of the requirements. The tie in here is that umbrella insurance may require you to have certain components and certain coverage thresholds. The end of this article gives tons of examples of situations that would be covered by an umbrella policy. Umbrella policies are general liability insurance, which covers someone suing you for damages of any kind, but most often these are the result of an auto accident where someone is hurt. In any case, this article could be assigned as background or used as a reference when covering auto insurance.

Home

With wildfires raging and hurricane season off to a good start, it might be time to see if your homeowners insurance actually covers you for damage from natural disasters. This may depend on where you live. Or perhaps you live in a high-risk area and have had your insurance cancelled! You may need to get specific natural disaster insurance. This article discusses what may or may not be covered if you suffer loss from natural disasters like tornadoes, earthquakes, and even sinkholes in addition to wildfires and hurricanes. (CNET)

Looking for a good primer on the basics of homeowners insurance and definitions of all the terms used? Check out this Miami Herald article.

Health

With so many people losing jobs during the pandemic, many of those job losses meant health insurance was gone too. But thanks to expansion of Medicaid in some states and the opening up of health insurance exchanges outside of the typical enrollment period, the percentage of Americans without health insurance did not increase but held pretty steady throughout the pandemic. (InsuranceNewsNet)

Beginning in October, insurance companies may no longer cover the patient portion of Covid-19 hospital care. The justification is that vaccines are available and therefore Covid-19 is preventable. (WXYZ)

Don’t want to get vaccinated? Be prepared to pay more for your employer-sponsored health insurance. Delta will begin charging unvaccinated employees $200 per month more. (NYT)

The New York Times did an expose on hospital pricing. Insurance companies negotiated prices for services can vary widely, and often the cash price is lower. Depending on an insurance policy’s terms for co-pays or co-insurance, some might actually be better off paying for some services in cash. Now, trying to find out this information at your local hospital may not be easy. The article suggests you start by “Googling” the hospital name and “pricing transparency” to start. I know I checked mine after reading this, and found a phone number to call to get the price of services. For more suggestions on how to find out, try this linked article. (NYT2)

Long-Term Care

The statistics are startling. About half of people over the age of 65 will need long-term care. Private rooms in nursing homes cost over $100,000 per year, and more in major urban areas. Medicare only pays for some rehab after hospital stays, and Medicaid has pretty strict income limits. The moral of this story is: plan ahead for long-term care. The sooner you plan, the better.

This article provides a step-by-step guide to figuring it all out. You still have to do the legwork. The plan may or may not mean purchasing long-term care insurance. There are two types to consider: a stand-alone, long-term care policy, or a hybrid life or annuity and long-term care insurance policy. Stand-alone policies are quite expensive. Like most other types of insurance, like home and auto, you pay all that money but hope never to need it! These are declining in popularity, and are often hard to get if you have an underlying health problem. The hybrid type may be attractive, but they are all different, and comparison may be difficult. One suggestion is that you might swap an existing life insurance policy for one of these. (Morningstar)

There is a parallel here to disability insurance. It is advisable to get disability insurance to cover loss of income until you have amassed enough in savings and assets to get through a disability financially. The same goes for long-term care insurance. If you have enough saved by the time you reach 65, the insurance may not be necessary. In any event, have a plan.

Tuition Insurance

Nothing really new here, but a reminder that as students head to college in the midst of the Delta variant of this pandemic, it is worth revisiting. (CNBC) Some colleges slip in some form of tuition insurance in their fees, so read the fine print. (turnto10) Understand that many of the policies available might not provide coverage if classes are remote, and many don’t cover withdrawals due to illness from Covid.

Business

With the rise recently of ransomware claims, companies that provide cyber insurance are seeing their profits drop.

Ransomware now accounts for 75% of all cyber insurance claims, up from 55% in 2016, according to the credit ratings agency AM Best. The percentage increase in claims is outpacing that of premiums, said a June report which concluded that “the prospects for the cyber insurance market are grim.” Fitch Ratings in April found that the ratio of losses to premiums earned was at 73% last year, jeopardizing the profitability of the industry. (cyberscoop)

This means that these policies will likely become more expensive, and could become harder to get. 

About the Author

Beth Tallman

Beth Tallman entered the working world armed with an MBA in finance and thoroughly enjoyed her first career working in manufacturing and telecommunications, including a stint overseas. She took advantage of an involuntary separation to try teaching high school math, something she had always dreamed of doing. When fate stepped in once again, Beth jumped on the opportunity to combine her passion for numbers, money, and education to develop curriculum and teach personal finance at Oberlin College. Beth now spends her time writing on personal finance and financial education, conducts student workshops, and develops finance curricula and educational content. She is also the Treasurer of Ohio Jump$tart Coalition for Personal Financial Literacy.