With the majority of U.S. drivers sheltering in place and a significant countrywide reduction in miles driven and car insurance claims, car insurance companies have taken unprecedented steps as “financial first responders” to ease burdens for their customers in the form of refunds and credits.
One of the first calls for car insurance refunds came from the Center for Economic Justice (CEJ) and the Consumer Federation of America (CFA). They raised concerns in mid-March about consumers overpaying for car insurance. They wrote a letter to state insurance commissioners on March 18 and called for the departments to direct car insurance companies to issue payment relief based on reduced mileage and fewer insurance claims.
Whether due to pressure from consumer groups and customers or not, three weeks later auto insurance companies started announcing refund plans. On April 6, Allstate and American Family Insurance were the first to announce refunds to their personal auto insurance customers. In the week that followed, more than 20 major insurance companies made similar announcements.
Refunds of 15% for April and May auto insurance premiums are common, but amounts vary by insurance comp
State departments of insurance, which regulate insurance companies, also started to weigh in. On April 7, Louisiana Insurance Commissioner Jim Donelon called on auto insurance companies in his state to take a similar approach to Allstate. On April 13, California Insurance Commissioner Ricardo Lara ordered insurance companies in the state to make an initial premium refund for the months of March and April within 120 days.
The total amount returned to U.S. auto insurance customers will be more than $10 billion, according to an April 11 estimate by the Insurance Information Institute.
How Did Car Insurance Companies Decide On Their Refund Amounts
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