Insurers Offer Car Insurance Break During COVID-19 Crisis

Dani Milton
April 7, 2020

The novel coronavirus has upended life as we know it throughout America. It has brought the nation’s economy to a grinding halt and caused many offices, stores, and cultural spots to close indefinitely. Today, almost 97 percent of Americans are under shelter-in-place orders issued by state governments to reduce COVID-19 transmission rates.

On Monday, Allstate and American Family Insurance announced that they are giving their auto insurance customers a rate reimbursement because they aren't driving as much as due to stay-at-home orders. They are the first two insurers to announce this small refund for consumers. Other auto companies are following their example. To see what new rates you're eligible for, visit here

Organizations Demand Insurers Refund Money to Policyholders

Consumer groups have advocated for insurance refunds for policyholders since the crisis began. On March 18, the Consumer Federation of America (CFA) and the Center for Economic Justice wrote a letter to state insurance commissioners, who are tasked with regulating insurance companies to ensure their rates are not excessive. They asked regulators to take immediate action and order insurers to provide customers with refunds or offset payments.

“We write to urge you to direct auto insurers in your state to provide premium offset payments to policyholders whose driving has been affected by COVID-19,” the groups argued in a written statement. “Specifically, for those policyholders whose miles driven has declined and will continue to remain lower than anticipated at the time of policy rating for the foreseeable future.”

The organizations claim that without a return of premiums, millions of sheltering-in-place Americans will pay excessive premiums based on outdated estimates of miles driven.

Policyholders Receive a Premium Break from Allstate

Allstate recently announced that it’s giving its auto insurance customers a “Shelter-In-Place Payback” in April and May 2020. On average, personal car insurance customers may receive 15 percent of their money back based on their monthly premiums for April and May. The insurer will also provide complimentary identity protection for the rest of the year. They say the program payout will total $600 million.

New York Times reporter Ron Lieber recently interviewed Allstate’s Chief Executive Thomas J. Wilson about their new refund program. Wilson said the company made the changes after scrutinizing their consumers’ driving habits. They learned work commutes accounted for one-third of their customers’ total time on their road.

Allstate says it will automatically deposit the funds back to the bank or credit card account customers used for payments. If they prefer, individuals may use these refunds as credits for future bills. The company suggests that consumers can receive their refunds faster through their free mobile app. Policyholders should check their payment information to ensure it’s up to date.

They will automatically extend coverage to policyholders who use their vehicles to deliver food, medicine, and other goods for a commercial purpose during COVID-19. Usually, standard policies exclude this coverage. This protection lasts while the COVID-19 emergency is in effect, and requires no action on the policyholder’s part.

Customers facing financial challenges can ask Allstate for a special plan that delays payments for 60 days without any additional penalties. For details about the program, visit this page.

American Family Insurance Announces Premium Relief Payment Program

American Family Insurance announced its Premium Relief Payment program this week.

“Through all the difficulties and uncertainty the COVID-19 virus has brought forward, one thing hasn’t changed — our support, belief, and commitment to doing everything we can to inspire and protect your dreams and all the things you’ve worked hard to achieve,” American Family said in a released statement. “In response, we are taking the unprecedented action to help our customers by providing a one-time $50 payment for each personal automobile insured with us through our premium relief fund.”

The insurer said that it will provide the refund for each private passenger automobile policy in force as of March 11, 2020, when the World Health Organization declared COVID-19 a pandemic.

The insurance company says it is offering the money because there will be fewer accidents since there are fewer drivers on the road. Both their Classic and Advance policyholders are eligible for the refund.

The following policyholders are not eligible for the $50 refund from the company:

  • Cycles
  • Campers
  • Personal trailers
  • Motor homes
  • Specialty vehicles (including golf carts, mini trucks, snowmobiles, tractors, personal mobility devices, and farm machinery)
  • Vehicles not owned by the customer but covered under a non-owner car insurance policy.

American Family Insurance will receive their refunds by checks. The company says it will issue checks quickly since many people are experiencing financial hardship. They have received regulatory approval in Wisconsin and will begin mailing checks on April 6, 2020. Checks will be sent to customers in other operating states pending regulatory approval. For details, visit this page.

Auto Insurance Companies Offering Additional Payment Options for Consumers

Consumer groups expect other auto insurance providers to follow Allstate and American Family Insurance’s example and give some refunds to their customers. Most companies now offer payment assistance programs for people who are experiencing financial hardships due to the novel coronavirus outbreak. Here is a listing of companies that have adjusted their payment options. Compare them all here.

Auto-Owners Insurance – Policyholders can contact their representatives to speak about changing their due dates, payment plans, or requesting a payment extension.

Erie Insurance – They offer different options, including delayed payments, adjusting installments, and changing plans. Additionally, the insurer will waive penalties and fees for late payments.

Farmers – This company will allow their policyholders to take extra time to pay and won’t cancel their policies through May 1, 2020. They will have until that date to make a mid-term payment if one is due. They will carry over any unpaid balance to the next billing statement with no late fees and penalties.

Geico – This insurance company won’t cancel coverage because of nonpayment or policy expiration through April 30, 2020. Customers can ask about special payment plans once normal billing resumes.

The Hanover – They have put a 60-day hold on all cancellations due to non-payment unless state governments have asked for a longer period. The company will waive all late fees.

Liberty Mutual – This business will waive fees and extend payment deadlines for customers impacted by the pandemic.

Mercury Insurance – The company asks its customers to contact them if they have financial hardship.

Nationwide – It will review hardship requests based on individual circumstances.

NJM Insurance – The insurer won't cancel policies due to non-payment through April 30. Additionally, it has flexible payment options for customers.

Progressive – The insurer has waived late fees and won't cancel or non-renew policies due to non-payment through May 15, 2020. The company will offer payment leniency to those who ask for it.

State Farm – The company advises customers facing financial difficulties to contact their local agents to discuss payment options.

Travelers – The insurance company won’t cancel or non-renew coverage due to nonpayment through May 15, 2020. It won’t charge interest, late fees, or penalties during this time.

USAA – They will not charge late fees or cancel auto or property insurance for members who need more time to pay because of the pandemic through June 17, 2020. This change is automatic, so members don’t need to contact USAA to request it. USAA will also offer special payment arrangements on auto, property, life, and health insurance.

States Mandating Insurance Protection

Forty-two states are now requiring insurers to provide payment extensions and other relief for consumers. They include Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Indiana, Maine, Maryland, Massachusetts, Mississippi, Missouri, Montana, Nevada, New Jersey, New York, North Carolina, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Virginia, Washington, and Wisconsin.

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