The nation’s large and small auto insurance companies have received much positive press in April of 2020, as news outlet after news outlet has reported insurers offering “rebates:” to customers. Insurers are quick to explain their reasoning: due to stay-at-home orders during the coronavirus pandemic, Americans are driving less (if at all), which has resulted in fewer auto accidents and subsequent accident claims on car insurance policies.
Therefore, the nation’s leading auto insurance companies have announced a variety of policy “credits” or “dividends.” Most companies—depending on the company—will either refund cash directly back to the policyholder (in the form of a credit to the customer’s bank account or credit card), or provide policy credits on future auto policy renewals. Over the past few weeks, insurers have announced refunds and credits that range from a one-time payment of $50 to some percentage of the policy holder’s monthly premiums (ranging from 15% to 35% over a number of months). Consumers should make themselves aware of their insurance provider’s specific COVID-19 “refund” policies, as those that apply to future policy renewals could be lost by a customer who cancels auto insurance or renews with a different company for their next policy period.
While these “refund” announcements have been applauded by many media outlets and politicians, it is important for consumers to know that, yes, insurers will credit policyholders a portion of premium payments, but these credits to consumers represent a mere fraction of what auto insurance companies should save in policy payouts as much of America works from home and shelters in place. Industry experts predict that the nation’s largest insurance companies, added together, will refund between $7 and $10 billion to consumers during this time of Americans driving less. However, these same large companies collect premiums that total, roughly, $180 billion from consumers each year.
To save even more money, especially those insured who have lost a job or lost wages (when every dollar is important to the family’s monthly budget), the attorneys at Sears & Associates, P.C. recommend auto insurance customers call their insurance provider in order to (1) learn what monies they may receive in terms of a policy credit during this pandemic, (2) report fewer miles driven and ask about a mileage discount, and (3) reduce coverages on vehicles not being driven during the COVID-19 crisis. Additionally, for drivers who carry policies with smaller, local insurers, it would be wise to research what the nation’s larger carriers are offering their customers and then request a similar refund from the local insurer.