Cut your Covid insurance bills

Driving less in lockdown? Ask your insurer for a refund, says Will Kirkman

Motorists using their cars less during lockdown may be needlessly overpaying on their insurance – and might even be owed money by their insurance company.

During the first lockdown last year, a massive drop in road traffic accidents allowed insurers to pocket an extra £1.3bn – or £40 per motorist – while cars stayed on their driveways.

While a handful of insurance companies offered refunds to customers, including Admiral and LV, the vast majority did not.

However, since then many insurers have allowed drivers to change the terms of their policies without incurring a fee, to reflect the fact that they are driving fewer miles. Others are now also offering refunds to those who drove less during the first lockdown.

This means that motorists who are driving fewer miles, or did so last year, could be overpaying for their insurance or in some cases could be owed money.

For example, Direct Line customers can now apply for refunds if they drove fewer miles than usual during the first lockdown.

The insurer said policyholders who paid annually were still eligible for a refund, while monthly payers could apply to have the rebate spread over their remaining monthly instalments. Applications are still open, but the refunds only apply to the first lockdown until July last year.

However, in October, Direct Line launched a scheme called Mileage Moneyback, which offers rebates to drivers who have driven fewer miles than they expected at renewal. Customers will receive 2pc of their premium back for every 1,000 miles they don’t drive, up to a maximum of 20pc.

A spokesman for Direct Line said: “The sooner policyholders give us their initial mileage reading, the bigger their refund could be. So far, more than 220,000 customers have registered, and more do each day.”

Churchill is also offering refunds to policyholders who reduced their mileage significantly between March and July last year. It said that while at present refunds weren’t available for the current lockdown, it was “continuing to monitor the situation” and the length of the restrictions.

Aviva, Axa, Hastings and More Than will allow drivers to adjust their mileage on their policies free of charge, which may reduce their monthly premium. Aviva added that customers who paid annually might be eligible for a refund.

Last year, LV was one of the first insurers to offer refunds of up to £50 for those hit financially by Covid, such as those who had been made unemployed or furloughed. It is still offering those struggling financially because of Covid a 10pc refund on their annual premium.

LV policyholders who are driving less can also reduce their level of cover free of charge. Excesses on claims have been waived for those hit financially by the pandemic, and free enhancements to cover are on offer to existing key worker customers.

Admiral, which originally offered customers refunds totalling £ 110m after the first lockdown, said that was a “one- off payment” and would not necessarily happen this time.

A spokesman for the firm said: “It’s too soon to say what will happen in the current lockdown, which is expected to last for several weeks, and we don’t know exactly how this will affect vehicle use.

“Any changes in our claims experience will be reflected in our pricing for motor customers.”

Meanwhile, motorists will continue to be insured for non- essential trips during the new lockdown.

Many drivers will have “social” car insurance, the most basic type of motor cover available. This type of policy only insures driving for leisure. In normal circumstances, people who commute by car have to upgrade their policy to social and commuting or business cover.

Drivers commuting by car to avoid public transport are now also covered even if they haven’t told their insurer or upgraded their policy to include travelling to work. However, using a vehicle to deliver goods as part of the driver’s work is not covered.

But if the motorist is driving to help people who are affected by Covid, for example delivering medical supplies, they won’t need to update their insurance and will remain covered.

This temporary easing of insurance rules was due to end in December, but has since been extended to March 19.

A spokesman for the Association of British Insurers said: “During previous lockdowns, many motorists used their vehicles less, but still needed cover for when they did drive, as well as for the risks of theft and damage when the vehicle was not in use. Insurers have and continue to give extra support to motorists given the exceptional circumstances.”

Drivers renewing their cover should tell their insurer of any changes to their circumstances.

From March 20, drivers will not be insured for commuting on social policies, nor will they be if they use their cars to deliver essential goods without the right type of cover.

‘The sooner drivers give us their initial mileage reading, the bigger the refund could be’