Everything You Need to Know

Millions of Americans are still out of work even as we see a possible end to the COVID-19 pandemic. Unfortunately, bills don’t stop coming when you start receiving unemployment and many people in this situation find themselves struggling to make ends meet.

While you may have concerns about finding an auto insurance policy if you are out of work, unemployment does not disqualify you from coverage requirements. Insurers instead gauge the risk of offering you insurance based on your credit score, geographic location, make and model of vehicle, age, and driving record. Review these considerations if you are wondering about car insurance for the unemployed.

What Are the Factors in Auto Insurance Cost?

Some auto insurance companies offer usage-based policies. They require the driver to install a device in their vehicle that monitors your driving and adjusts your rates accordingly. U.S. News and World Report notes that this so-called telematics policy is increasing in popularity.

Safe driving history also correlates with savings on your auto policy. For example, your premium cost can go up by as much as $1100 on average after an arrest for driving under the influence of drugs or alcohol.

Because every car insurance company has its own method for calculating customer rates, shopping around is the best way to find the lowest cost. Your policy price can vary dramatically based on each insurer’s unique algorithm.

If you are unemployed, you might qualify for a low-mileage discount if you no longer commute to work. Make sure you update your agent and let them know about your average monthly mileage for a potential discount.

If possible, maintaining a good credit score can help you save money on auto insurance during your stint of unemployment. In most states, insurance companies will review your credit history when setting car insurance pricing.

Do Auto Insurance Companies Charge More for Unemployed Drivers?

According to The Zebra, you do not have to tell your insurance company if you lose or quit your job. In addition, the insurer cannot charge you more for coverage based on the type of work that you do. However, you might qualify for certain discounts based on your employment. For example, some insurance companies have discounts for teachers, police officers, and other professionals with a statistically lower risk level. If you have this type of discount and leave your job, you may end up paying more for coverage without the discounted rate.

The website notes that common professional discounts include lower auto insurance premiums for:

  • Certified public accountants
  • Pilots
  • Teachers
  • Architects
  • Scientists
  • Engineers
  • First responders
  • Nurses, doctors, and other health care providers

    How Much Auto Insurance Coverage Do I Need?

    If you become unemployed, it might be a good time to check the value of your car and see if you can save on auto insurance. If you own your car outright and do not have a loan or a lease, you only need coverage that fulfills your state’s minimum liability limits. You might want to keep optional policies that protect your vehicle, such as comprehensive and collision coverage, depending on how much your vehicle is worth and if you can afford to repair or replace it after an accident.

    Check a reputable source such as the NADA Guide or Kelley Blue Book to estimate the current market value of your vehicle. Because cars depreciate in value over time, an older car is worth much less than a newer model.

    If the difference in cost between full coverage and liability-only is more than the value of your vehicle, consider dropping comprehensive and collision. Otherwise, you might want to keep it so that you can get a new car if you have a crash. Go through this process about every year if you still carry full coverage on a vehicle you have owned for some time.

    How Can I Save on Auto Insurance when Unemployed?

    As mentioned above, safe driving habits can save you money if you enroll in a telematics program. The Zebra reports these average discounts by insurance company:

    • Up to 25 percent with Drivewise from Allstate
    • Variable discount with DriveSense from Esurance
    • Up to 30 percent with RightTrack from Liberty Mutual
    • Up to 40 percent with SmartRide from Nationwide
    • An average of $130 per year with SnapShot from Progressive
    • Up to 15 percent with Drive Safe & Save from State Farm

      You can also save money by paying your insurance premium in one lump sum. Most insurance companies charge more to make monthly or periodic payments on your policy. The Zebra notes that you can get an average discount of $69 per year for paying your policy in full and $22 by arranging for an electronic funds transfer.

      Consider bundling your auto policy with your homeowner’s insurance or renter’s insurance to take advantage of the associated multi-policy discount. According to the Zebra, the average savings with this method is about $73 per year for bundling renter’s insurance and $142 a year for bundling a homeowner’s insurance policy.

      Should I Cancel My Coverage?

      Bankrate reports that you should keep your auto insurance even if you lose your job. Even if you do not have a commute, you will end up paying more for auto coverage if you have a gap in policies. If you do have to drive after you let your coverage lapse, you could experience significant financial loss if an accident occurs.

      Most experts recommend comparing quotes from several different companies to save on auto insurance. Consider taking this route if you’re looking for a lower price because of unemployment.


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