Car Insurance Companies Giving Customers Partial Refunds during Pandemic

• allstate ($600 million) and american family insurance ($200 million) have both announced they will send some customer money back because of coronavirus, and they're also being more flexible about payment due dates.
• the center for economic justice and the consumer federation of america requested just such relief in mid-march.
• more recently, state farm, geico, and progressive are also giving money back.
  

update 4/11/20: state farm has announced it will cut premiums by 25 percent on policy premiums between march 20 and may 31.

update 4/9/20: insurance journal reports that three more companies—usaa, travelers, and progressive—are reimbursing holders of their auto insurance. progressive will credit customers 20 percent of their april and may premiums and suspend cancellations for nonpayment through may 15. for travelers customers, it's a 15 percent credit on april and may premiums, and for usaa, everyone with a policy in effect as of march 31 gets two months' worth of 20 percent credits on their premiums.

update 4/8/20: geico, owned by warren buffett's berkshire hathaway, said that it will be reimbursing its 19 million auto and motorcycle policyholders with a total of $2.5 billion. geico will offer a 15 percent credit on policies that are up for renewal between april 8 and october 7, which comes out to about $150 for each auto policy, and $30 for motorcycle policies.

you may have noticed fewer cars on the road these days, assuming you were on the road yourself during the shelter-in-place and work-from-home situation we're in under the coronavirus pandemic. insurance companies have noticed as well, and at least two—allstate and american family insurance—are taking action to refund some of the money people have spent to insure their cars, the ones that are mostly sitting still right now.

allstate: 15 percent back, expanded coverage for delivery drivers

allstate said it will give most of its customers 15 percent of their monthly premiums back for april and may. this will come to more than $600 million, the company said. allstate is also introducing a special payment plan for people to delay payments without a penalty and is expanding its insurance coverage for people who are using their "personal vehicles to deliver food, medicine and other goods for commercial purposes," even if its standard personal auto insurance policies exclude this sort of coverage under normal circumstances. finally, because of the increase in online interactions at this time, allstate is also offering free identity protection to its customers through the end of the year.

the company's ceo, thomas wilson, told cnbc that company data finds the numbers of cars on the road are down as much as 35 to 50 percent since the beginning of march, depending on location.

american family: one-time $50 payments, coverage added for restaurant delivery drivers

american family's covid-19 premium relief plan is more straightforward and will be made up of one-time payments of $50 for each vehicle covered by an american family personal auto policy, the company said. this will amount to $200 million in repayments, which are slated to start in wisconsin, where the company is headquartered. american family says it will get all of its 2.3 million checks sent out within 60 days, all while "diligently applying social distancing practices." like allstate, american family is also being more flexible with its late fees and payment deferrals, as well as extending private automobile coverage to food delivery drivers who are hired by restaurants.

"[because of covid-19] we believe [our customers] overpaid in their premiums," wrote jack salzwedel, american family insurance ceo, on medium. "it's our duty to return that premium, because it belongs to them."

on march 18, the center for economic justice (cej) and the consumer federation of america (cfa) sent a joint letter to state insurance commissioners. whether or not this letter prompted the insurance companies to take action, it did urge the commissioners "to direct auto insurers in your state to provide premium offset payments to policyholders whose driving has been affected by covid-19" because people are driving less these days. since the number of miles put on a vehicle are the "most accurate variable" insurers can use to estimate accidents, the letter said, people who were not given payment discounts would be "paying a premium that is now excessive."

geico, progressive, state farm

state farm's public affairs specialist, gina morss-fischer, told c/d last week that the company was considering a rebate. "we know our auto insurance policyholders are driving much less than anticipated," she said. on april 11, the company belatedly joined other insurers in announcing a $2 billion cut in insurance premiums for its customers. its good neighbor relief program will give a 25 percent credit on policy premiums due from march 20 through the end of may.

geico announced march 25 that it would temporarily pause policy cancellations due to non-payment and policy expiration. the pause will remain in effect through april 30, 2020.

in response to the announcement from allstate and american family insurance, the cej and cfa issued a new letter applauding the policy relief actions.

the two groups have now called on insurers and regulators to return "excessive premiums" to small businesses if those businesses have premiums that are based "not only on miles driven (commercial auto insurance) but on factors such as payroll, receipts, and other factors sensitive to collapse during the covid-19 crisis," the letter said.

douglas heller, an insurance expert for cfa, told c/d, "we are waiting on the others, because right now, most insurance companies are sitting on a coronavirus windfall."