Motorists are set to receive auto insurance refunds of more than $6.5bn as a result of the coronavirus lockdown leading to a significant fall in the number of the auto insurance claims.
Many of the best auto insurance providers have reacted after it was revealed that some parts of America are seeing 90% less traffic due to the stay-at-home orders imposed in response to the global pandemic. The Consumer Federation of America (CFA) said it follows that accidents and auto insurance claims are therefore likely to fall by similar amounts too.
“Data is showing that around the country many cities and counties are seeing 80 to 90% less traffic on the roads,” said Birny Birnbaum, Center for Economic Justice. “Accidents and claims have surely fallen by an unprecedented amount and the premiums that consumers are charged have to be revised drastically to reflect this change.”
Motorists have been one of the very few beneficiaries of the COVID-19 outbreak, with gas prices on the decline and cheaper auto loans making it a good time to buy a car.
This new financial windfall will see auto insurers either refund or credit drivers some of their auto insurance premium, and will undoubtedly provide a welcome boost to hard-pressed Americans everywhere. Most insurers said motorists won’t have to do anything to receive their money back, and that it will be applied automatically through the policyholder's most recent payment method on file.
How much can motorists expect to receive?
According to the CFA, individual auto insurers are offering motorists the following relief (as at April 13, 2020):
21st Century: 25% premium reduction for April
AAA Northern California: 20% refund for two months premium for policies in force as of April 30, 2020 credited or refunded by May 31, 2020
Allstate: 15% credit account or refund on premiums in April and May
American Family: $50 per vehicle covered, checks mailed
Amica: 20% credit on April and May premiums to account
Auto-Owners: 15% refund for April and May
Erie: has promised to reduce rates
Farmers Insurance: 25% discount on premiums in April
GEICO: 15% credit towards policies renewing April 8, 2020 to October 7, 2020
Germania: $25 credit per policy in effect March 31, 2020 and April 30, 2020, or refund if paid in full
Hanover: 15% credit on April and May in-force policies
The Hartford: 15% refund on April and May premiums
Kemper: 15% credit of April and May premiums, refund for paid in full
Liberty Mutual: 15% refund on two months of annual premium, as of April 7, 2020 via check or most recent payment method
Mercury General: 15% of April and May premiums, credited to account
Nationwide: $50 per policy, equivalent to 15% for two months, for policies as of March 31, 2020
NJ Manufacturers: 15% refund of three months’ premiums
Plymouth Rock: 25% premium credit on liability and personal injury protection coverages
Progressive: 20% credit for April and May premiums, refund for paid in full
Safeco: 15% refund on two months of annual premium, as of April 7, 2020 via check or most recent payment method
Shelter: 30% refund of April and May premiums
State Farm: 25% dividend of premium between March 20, 2020 and May 31, 2020
Tennessee Farmers: special payment of around 24% of two months’ premium paid per vehicle
Travelers: 15% credit on April and May premiums to customer account
USAA: 20% credit on two months' premiums, as of March 31, 2020
West Bend: $50 payment if insured as of March 11, 2020
If you have auto insurance with an insurer not featured on the list, it is worth checking their website or giving them a ring to see if you will qualify for a refund.
Could further auto insurance refunds be announced?
The CFA has noted that auto insurers have taken a variety of approaches to providing premium relief, and that announcements typically cover premiums for the months of March, April and May.
Given the extent of the coronavirus crisis and the length of time it is likely to impact motorists overall, the group said it did not believe the premium relief already announced will be sufficient given the likely drop in claims.
“We applaud the many insurance companies that have recognized that they cannot sit on policyholder premium while their customers sit at home,” said J. Robert Hunter, Director of Insurance for CFA and former Texas Insurance Commissioner. “But consumers might need double this amount to balance how much they pay with how much they drive this year. We expect companies and commissioners to help make this right as Americans struggle through this crisis.”