Most Americans are staying back home to help limit the spread of the coronavirus. This has led to a steep drop in driving, and hence, insurance claims. Thus, many auto insurers are passing on the benefits to customers in the form of discounts, credit or refunds of premiums.
Q1 2020 hedge fund letters, conferences and more
Before we discuss how to ask your auto insurer to give refunds, it is important that you know what other insurers are offering. These are the auto insurers that are offering discounts, credit or refunds to policyholders:
On Thursday, State Farm, which is the country’s largest auto insurer, expressed intentions to give about a 25% credit on premiums received between March 20 and May 31. Overall, the company says it will be returning $2 billion to customers on 40 million vehicles. In a statement, the company’s president and chief executive, Michael L. Tipsord, said their claims activity suggests that people are driving less.
“This dividend is one of the ways we’re working to help our customers during this unprecedented situation," Tipsord said.
On Monday, Allstate, which is among the biggest U.S. auto insurers, announced that it would return over $600 million in premiums to policyholders. According to the company, most customers will get a 15% “payback” of their monthly premium in April and May under its Shelter-in-Place Payback program. Allstate says that based on customers' preferences, it will automatically credit the money via their payment method on file or through their mobile app.
Liberty Mutual has come up with a Personal Auto Customer Relief Refund. The company will return about $250 million to its policyholders. According to the insurer, personal auto insurance policyholders will get about a 15% refund on two months' premium. The refund will be automatically credited via a check or customers' recent payment option.
Passing benefits to policyholders
American Family Insurance announced plans to return about $200 million to its auto insurance customers starting mid-April. The company said policyholders will receive $50 per vehicle.
On Wednesday, USAA, which is among the biggest property-casualty insurers, revealed plans to give back about $520 million to policyholders. According to the company, every user with an auto insurance policy as of March 31 will be entitled to a 20% credit on premiums for the next two months.
“Returning premiums provides timely help for our members,” USAA Chief Executive Wayne Peacock said in a statement.
Farmers Insurance announced that it will be reducing April premiums by 25%. The insurer also said it has come up with flexible payment plans and paused cancellations for the time being.
Geico will offer a 15% credit to auto and motorcycle policyholders for policies with a due date between April 8 and Oct. 7, 2020. The credit will amount to about $30 per motorcycle policy and about $150 per auto policy. The same credit will also apply to new policies purchased within the same period.
"The credit is part of our ongoing efforts to assist policyholders during this unprecedented time," Geico said on its website.
These insurers are also offering refunds
Nationwide plans to give a one-time premium refund of $50 per policy. The refund will be applicable to personal auto policies active as of March 31. According to the company, the refund will be credited automatically within the next 30 days.
Progressive plans to offer a 20% credit on active personal auto policies. The credit will be applicable to the April and May premiums. Progressive says it might extend the credit to more months.
Erie Insurance is also lowering the cost for personal/commercial auto insurance in 12 states and the District of Columbia. Overall, the company is expected to pass on benefits worth about $200 million to policyholders.
Travelers Companies said on Wednesday that it will provide personal auto insurance customers a credit of 15%. The credit will apply to the April and May premiums under the company’s new stay-at-home auto premium credit program. Further, the company said it will continue to cover policyholders who are involved with food, grocery, pharmacy and medical deliveries.
Aviva Canada announced that it is offering about $100 million in auto insurance premium relief. According to the company, those who have stopped driving entirely will be able to reduce their premium by up to 75% by applying for the new “#StayHome” endorsement.
How to demand a refund from your auto insurer
Even though most auto insurers are offering refunds or credits due to the coronavirus outbreak, there may be many that aren’t offering any benefits. If your auto insurer does not offer any benefit, you can talk to them, telling them about the refunds that their competitors are giving.
You may also make them aware that you are now driving much less, and thus, a lower premium is justified. Experts say policyholders can also demand an adjustment in the amount of mileage that is based on the premium calculation. If they are reluctant to offer anything, you can at least ask them to offer perks. These perks could be extending the grace period, waiving late fees or both.
If your auto insurer is not offering any refund or other benefit, then it would be a good idea to switch to another insurer. However, you must not cancel your current policy without getting a new policy. If you do, you may be fined, or insurance companies may charge you for a lapse in premiums.
