Another federal stimulus check may never come, but some drivers across the country will get a stimulus check from their insurers. This $400 coronavirus stimulus check from auto insurers, however, is primarily coming for Michigan drivers. These stimulus checks come after state authorities pressured these companies to return some of the massive profits they made last year due to less traffic on the roads.
When Baupost, the $30 billion Boston-based hedge fund now managed by Seth Klarman, was founded in 1982, it was launched with a core set of aims. Q4 2021 hedge fund letters, conferences and more Established by Harvard professor William Poorvu and a group of four other founding families, including Klarman, the group aimed to compound Read More
Car insurance companies made huge profits last year but didn’t pass on the full benefits to the end users. Such an approach from insurers triggered massive criticism from advocacy groups, as well as from government authorities.
“Billions in surplus funds should not be held by insurers to invest for their own profit or be conditioned on renewal of a policy,” Gov. Gretchen Whitmer said last month.
Also, Whitmer criticized the Michigan Catastrophic Claims Association (MCCA) of hoarding $5 billion more than necessary. MCCA charges an annual fee from drivers in exchange for covering the cost of personal injury claims.
Following the criticism, a group of insurance companies agreed to distribute about $3 billion of the surplus to drivers. This money, however, won’t be available immediately, rather it will be available in early March.
Once the funds are available, the money will be distributed to the eligible drivers within 60 days. Eligible drivers will get a $400 coronavirus stimulus check from auto insurers for each vehicle they own.
Though these stimulus checks are a welcome relief, especially with Omicron cases rising, it is only a one-time payment.
Who Will Get It?
To get $400 coronavirus stimulus check from auto insurers, you must have had an active auto insurance policy before 11:59 p.m. October 31, 2021. Other than this, there are no more requirements to get the stimulus money. The money will be automatically refunded to the eligible users.
MCCA plans to turn over the surplus funds to the Michigan insurance companies by March 9, 2022. After this, it would be the responsibility of the insurers to issue the refunds to the eligible policyholders. So, the eligible users are expected to get the money in the second quarter of 2022.
Apart from Michigan, California has also ordered car insurers to issue larger refunds to eligible users. Several other states, including New Mexico and Washington, are also in the process of determining if insurers paid back enough money to drivers.
Separately, Massachusetts has also sent a letter to the insurance regulators, while class-action lawsuits have been filed in Nevada and Illinois.
According to a Consumer Federation of America report, auto insurers made a profit of at least $29 billion in 2020 as miles driven, accidents and insurance claims dropped significantly last year.