Thursday, July 30, 2020

Auto insurance rebates and lower premiums as Americans drive less, a driving update for Snow Bear during July 2020

Last month, I reported most Americans stay home, allowing people to speed on open roads, when I gave a driving update for Pearl the Prius. Today, I'm sharing a clip from ABC 13 in Grand Rapids, Auto insurance savings due to less driving during pandemic to begin today's driving update for Snow Bear.

Have you received checks in the mail from your auto insurance company? Many are getting refunds, because they didn't drive during the stay at home order.
While some of this report pertains only to Michigan, which recently changed its laws governing auto insurance, some of this should, if it isn't already, apply to the rest of the U.S., as most of us are driving much less.* Bill McBride of Calculated Risk has an update on that story in DOT: Vehicle Miles Driven decreased 26% year-over-year in May
The Department of Transportation (DOT) reported:
Travel on all roads and streets changed by -25.5% (-72.9 billion vehicle miles) for May 2020 as compared with May 2019. Travel for the month is estimated to be 213.2 billion vehicle miles.

The seasonally adjusted vehicle miles traveled for May 2020 is 199.8 billion miles, a -26.1% (-70.6 billion vehicle miles) decline from May 2019. It also represents [a] 24.1% increase (38.8 billion vehicle miles) compared with April 2020.

Cumulative Travel for 2020 changed by -17.3% (-227.2 billion vehicle miles). The cumulative estimate for the year is 1,087.0 billion vehicle miles of travel.

emphasis added
This graph shows the rolling 12 month total vehicle miles driven to remove the seasonal factors.

The drop is even more dramatic in this graph than it was last month. On the other hand, the year-over-year comparison between May 2019 and May 2020 shows that driving is recovering, if still way down from last year.

Both of these graphs show the situation two months ago. For a more up-to-date depiction of how much Americans are driving now, I'm sharing the latest graph of gasoline consumption from the Energy Information Administration in Calculated Risk's High Frequency Indicators for the Economy.

This is what I expect the graph comparing the year-over-year change in monthly driving will look like in two months. Even so, the rolling 12 month total vehicle miles driven will continue to go down for at least the next year, although I expect it will start to bottom out in the second half of 2021. I don't know what it will mean for auto insurance rates yet.

Follow over the jump for more driving math.

It took my wife and I 255 days to drive Snow Bear 1,000 miles between November 14, 2019, when she passed 6,000 miles and July 26, 2020, when her odometer rolled over 7,000 miles. That translates to 3.92 miles per day, 119.61 miles per standard day, and 1435.29 miles per leap year and 1431.37 miles per standard year. That's more than the 3.32 miles per day, 101.33 miles per month, and 1212.62 miles per standard year my wife and I drove her between January 16, 2019 and November 14, 2019. I mentioned one reason why in Driving update for January 2020: Pearl passes 50,000 miles when I wrote "I'm crediting it to having my car out of commission for two weeks because of a dead battery, which might show up when I next report on Snow Bear this summer..." Well, it did. In addition, I'm driving Snow Bear at least once a week to keep it running.

Now for the total miles driven by both of us, which requires an update and analysis on Pearl. I drove Pearl 202 miles between her passing 51,000 miles on June 26, 2020 and July 26, 2020, exactly 30 days. That converts to 6.73 miles per day, 205.37 miles per standard month, and 2457.67 miles per standard year. Add that to the 1,000 miles she drove between January 27, 2020 and June 26, 2020 and the 1,000 miles driven between October 28, 2019 minus the 17 days times 18.52 miles per day until Snow Bear passed 6,000 miles on November 14, 2019, and I drove Pearl 1,887 miles, rounded to the nearest whole mile, in the same 255 days. Combined, my wife and I drove our cars 2,887 miles over 255 days for averages of 11.32 miles per day, 345.31 miles per standard month, 4143.69 miles per leap year, and 4132.37 miles per standard year. That's a little more than half the 20.16 miles per day, 614.86 miles per month, and 7358.21 miles per year my wife and I drove our cars between Wednesday, January 16, 2019 and November 14, 2019. We drove both cars just a little more than I drove mine alone in between October 2019 and January 2020, when I drove Pearl an average of 10.99 miles per day, 335.16 miles per standard month, and 4010.99 miles per year. Wow!

I may not post another driving update for Snow Bear this year, but I expect I will post another for Pearl in October or November. I'll update my readers when that happens. Stay tuned.

*I know my wife and I have been notified of rate reductions both for decreased driving and because of changes in Michigan's auto insurance laws, but any rebates were deposited electronically, so I can't say I've seen any physical checks because of this.

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