Are Car Insurance Refunds and Rate Reductions On the Way?

Are Car Insurance Refunds and Rate Reductions On the Way?

From the It’s-Not-All-Bad-News Department (maybe it’s more like a wobbly desk these days, but it’s still a thing): With you and everyone you know probably driving next to never in these days of stay-at-home orders and social distancing, at least two insurance companies have announced that they’ll start sending refund checks to car insurance policyholders as a way of offsetting the effects of the coronavirus pandemic. And if your own insurance carrier isn’t offering a refund or rate reduction, there’s never been a better time to ask for one.

On April 6, Allstate announced a “Shelter-In-Place Payback” that will supposedly give its car insurance customers over $600 million in refunds over the next few months, with most customers getting back around 15 percent of their premiums for April and May. “This is fair because less driving means fewer accidents,” the company said, adding, “Customers will receive the money back through a credit to their bank account, credit card or Allstate account.”

Also on April 6, American Family Insurance announced its “Auto Insurance Premium Relief Payments” program, which provides any car insurance policyholder with a one-time, 50-dollar payment for each vehicle insured with the company.      

The logic behind these moves is fairly irrefutable. Why should policyholders owe the same car insurance premium they paid in February—when they were driving a few hundred miles a week and exposing the insurance company to an increased financial risk with every tick of the odometer—as they’ll owe in April and May (and perhaps beyond), when their insured vehicles are likely sitting curbside or in driveways, serving as idle targets for birds? The surprising part is that companies like Allstate and American Family Insurance seem to have taken this consumer-friendly action with no prompting or pressure.    

If you’re not an Allstate or American Family Insurance customer, now may be a good time to contact your own car insurance company and ask for a reduced rate, at least until your city, county, or state lifts whatever stay-at-home orders and other government-mandated restrictions are in place where you live. You don’t necessarily need to threaten to take your business elsewhere—although if all you’re getting is pushback, name-dropping Allstate or American Family probably won’t hurt. If your car insurance policy uses a base rate plus pay-per-mile charges (companies like MetroMile provide coverage under this kind of formula), you’re likely already seeing savings, and there might not be much room to negotiate the base rate down, but it can’t hurt to have the conversation.

Get more coronavirus-related car insurance tips, and if you do happen to get into a car accident during a shelter-in-place order or other emergency government measure, here’s what to keep in mind

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