A historic pandemic is under way, with many, if not most, Americans trying to hunker down and stay home as much as possible. Many of those who are able to are working from home now; many others have lost their jobs.
Our lives have been disrupted, with major changes in how we shop and get various things done. Our financial lives are being disrupted, too, and that includes costs related to our vehicles.
How the COVID-19 crisis affects your automotive life
Just how much less are Americans driving? Well, the folks at Arity have some numbers, as they studied data from smartphones and location trackers installed in cars. They found that, overall, 40% fewer miles than normal were driven in the last two weeks of March, and in some places, that number was more like 60%. In California and New York, driving was down 70% once stay-at-home orders were in place.
There are some obvious ramifications to such declines. For one thing, when we drive a lot less, we spend a lot less on gas. Let's say you normally drive 1,000 miles per month, that you get 22 miles per gallon, and that you pay an average of $2.25 per gallon. (Gas prices are considerably less than that recently, with a national average price of around $1.88 per gallon as of May 18, per the American Automobile Association.) That would cost you about $102 per month. But for all the months that your driving is cut in half, you'll spend only about $50, saving the other $50. If you're sheltering in place for four months, that's $200 saved. If your lockdown lasts a year, $600.
Meanwhile, driving less means less wear and tear on your tires and the rest of your car. Your tires are likely to last longer, and you're likely to spend less on repairs and maintenance, as well.
(It's worth noting that while huge numbers of people are driving much less, some people are actually driving more, such as if they've taken on a delivery job on the side.)
Another realm that's affected when we drive less is car insurance. The premium you pay is likely based in part on how much you drive. Many insurance companies, recognizing this, have already issued rebates to customers, essentially giving them a discount on their policies. Allstate, for example, has said that it will pay back 15% of premiums to policy holders for April and May, while Berkshire Hathaway's GEICO announced that it will give customers a 15% credit on their policies for the next six or 12 months. USAA, meanwhile, has paid a $520 million dividend to policy holders and is following that up with another $280 million, telling customers to expect an automatic 20% credit on one months' worth of premium. The Consumer Federation of America estimates that more than $6.5 billion is going back to auto policy holders due to the coronavirus crisis.
These changes have some wondering whether more policies in the future will charge policy holders per mile driven. Allstate, Nationwide, and Liberty Mutual are some of the many companies that already offer pay-per-mile policies.
Money-saving automotive tips
There are more financial benefits available to you if you take some actions now or soon. For example:
- Look into whether your auto insurer is offering any sort of credit, and if so, make sure you get it.
- If your driving has been cut back so much that you think you need more of a credit, contact your insurer to see if your policy can be repriced. Vehicles driven less than 5,000 miles annually and only used for pleasure and not for work are likely to be offered the lowest-cost coverage. (Hike your deductible for even more savings, but be sure you can afford to pay that deductible if you have to.)
- Consider calling some other insurance companies to get quotes. With your new driving habits, a different company might offer the best rate. (Note, too, that you'll often save more by bundling both car and home insurance coverage with the same company.)
- If you are able to not use one of your vehicles at all, you might be able to suspend the coverage on it for a while. (Just be sure you don't take it on the road.)
- Learn what your car's maker is offering in this coronavirus environment. Several car companies, for example, are augmenting payment protection for financed cars, and some are extending warranties.
- Don't let your car sit idle for too long, as that can lead to problems such as a dead battery or corroded brakes. Be sure to take it out for a spin now and then -- for about 20 minutes every other week, at least.
- Keep your tires properly inflated, lest they "flat-spot" from sitting immobile too long.
- Disengage your parking brake, as it's not good to have it on for too long. (Be sure you're parked on level ground.)
- Clean the car occasionally, lest droppings from birds or trees damage the paint.
- Check for wildlife now and then, as idle cars sometimes end up with critters living in them -- sometimes in the engine area or wheel wells. Such pests can also cause damage, by chewing through wires or eating into upholstery.
- If you're having trouble paying your vehicle-related bills, talk to your insurer and/or financing company, as they may be able to offer some relief by extending grace periods or waiving fees or penalties. (This applies to other creditors, too, such as credit card companies.)
As our lives adjust to the new normal, our finances and financial health can change, too. Spend a little time looking for ways to save money during the coronavirus crisis and you'll likely find some.