Auto insurers offer discounts to customers during pandemic

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  • Allstate ($ 600 million) and American family insurance ($ 200 million) have both announced they will be sending money back to customers because of the coronavirus, and they are also more flexible on due dates for payments.
  • The Center for Economic Justice and the Consumers Federation of America demand just such a relief in mid March.
  • More recently, State Farm, Geico and Progressive have also reimbursed.

    UPDATE 4/11/20: State farm announced that it will reduce premiums by 25% on policy premiums between March 20 and May 31.

    UPDATE 04/09/2020: Insurance Journal reports that three other companies (USAA, Travelers and Progressive) reimburse holders of their auto insurance. Progressive will credit customers 20% of their April and May premiums and suspend non-payment cancellations until May 15. gets two months of 20 percent credits on their premiums.

    UPDATE 4/8/20: Geico, owned by Warren Buffett’s Berkshire Hathaway, said he would pay off his 19 million auto and motorcycle policyholders with a total of $ 2.5 billion. Geico will offer a 15% credit on policies to renew between April 8 and October 7, which works 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 find ourselves in under the pandemic of coronavirus. Insurance companies have also noticed, and at least two – Allstate and American Family Insurance – are taking action to reimburse some of the money people spent on insuring their cars, the ones that are mostly stationary. right now.

    Allstate: 15% refund, extended coverage for delivery drivers

    Allstate said it will reimburse most of its customers for 15% of their monthly premiums for April and May. This will amount to more than $ 600 million, the company said. Allstate also introduces a special payment plan that allows people to delay payments without penalty and extends insurance coverage to people who use their “personal vehicles to deliver food, medicine and other goods for business purposes.” even though his standard personal car insurance policies exclude this type of coverage under normal circumstances. Finally, due to the increase in online interactions right now, Allstate will also be offering free identity protection to its customers until the end of the year.

    Company CEO Thomas Wilson said CNBC that company data shows the number of cars on the road has dropped 35 to 50 percent since early March, depending on location.

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

    American Family’s COVID-19 premium relief plan is simpler and will consist of one-time payments of $ 50 for each vehicle covered by an American Family personal auto policy, the company said. That will amount to $ 200 million in repayments, which are expected to begin in Wisconsin, where the company’s headquarters are located. American Family says it will get all of its 2.3 million checks sent out within 60 days, while “diligently applying social distancing practices.” Like Allstate, American Family is also more flexible with its late fees and payment deferrals, as well as extending private auto coverage to food delivery drivers hired by restaurants.

    “[Because of COVID-19] we believe [our customers] overpaid in their premiums, “wrote Jack Salzwedel, CEO of American Family Insurance, on Medium.” It is our duty to return this 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 insurance companies to take action, it urged Commissioners “to order auto insurers in your state to make premium compensation payments to policyholders whose driving has been affected by COVID- 19 “because people drive less these days. . Since the number of kilometers driven on a vehicle is the “most precise variable” that insurers can use to estimate accidents, according to the letter, people who would not have received payment discounts “pay a premium that is now excessive “.

    Geico, Progressive, State Farm

    State Farm public affairs specialist Gina Morss-Fischer said CD last week that the company was considering a discount. “We know that our auto policyholders are driving a lot less than expected,” she said. On April 11, the company belatedly joined with other insurers in announcing a $ 2 billion reduction in insurance premiums for its customers. Its Good Neighbors Relief Program will provide a 25% credit on policy premiums due from March 20 to the end of May.

    Geico announced on March 25 that it would temporarily suspend policy cancellations due to non-payment and policy expiration. The break will remain in effect until April 30, 2020.

    In response to the announcement from Allstate and American Family Insurance, the CEJ and CFA issued a new letter applauding the police relief measures.

    The two groups have now called on insurers and regulators to return “excessive premiums” to small businesses if those businesses have premiums based “not only on kilometers driven (commercial auto insurance) but on factors such as payroll, receipts and other factors susceptible to collapse during the COVID-19 crisis, “the letter said.

    Douglas Heller, an insurance expert for CFA, said CD, “We are waiting for the others, because right now most insurance companies are sitting on a windfall of coronavirus.”

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