Tips, Tricks & Trends

Auto Insurance Companies Give Money Back For Sheltering-In-Place

Two auto insurance companies so far are returning premiums because customers are driving less due to the coronavirus. The sheltering in place orders means people are driving a lot less. As a result, they will get a “payback” of 15% of their monthly premium from Allstate Corp. Also, American Family Insurance from Madison, Wisconsin, will return $200 million to its auto insurance customers starting in mid-April. American Family will give families $50 per vehicle on the policy.

There are few silver linings to the coronavirus but paybacks are one of them

Scenic roads | Getty

“There are very few silver linings out there, but auto insurance companies are definitely one of them,” said analysts Paul Newsome to Automotive News.  If one is driving less then they and their vehicle are exposed less. Less exposure means less risk and that means a lower claim frequency. Newsome expects big insurers like Allstate and Progressive to be posting really good first-quarter results.

Commercial insurer Next Insurance is also giving a discount starting this month. It’s returning 25% “stay at home” orders have reduced risk for insurers. 

Allstate is paying back 18 million policies including its own brand Allstate plus Esurance and Encompass; both subsidiaries. In data analysis, it is estimated that of the 23 million cars insured mileage driven has dropped 35% to 50% throughout the country. The data comes from tracking Allstate products some of its insured are using in exchange for discounts.

Allstate is seeing driving reductions regardless of whether states have mandatory “sheltering in place”

The open road | Getty

Allstate is seeing the reduction regardless of whether states have a mandatory “shelter in place” order or not. One interesting note is that both police and highway patrol are finding drivers are speeding at higher speeds because roads are less dense. But this means accidents could be more severe because of the higher speeds involved. They have stepped up their efforts to control the increased speeding that is ramping up.

As word travels about the discounts and insurers analyze their own data we should be seeing all or most insurers getting on the payback bandwagon. All companies know that many of its insured in the coming months won’t be in a position to pay their premiums. This is a way to keep things afloat as we recover from the economic effects of the coronavirus shutdowns.  

Motorbiscuit shows other ways to reduce your insurance premiums

A 1969 Porsche 911T sports car driving in the rural foothills of southwest California. (Photo by Rich Pearce/Total 911 Magazine/Future via Getty Images)

Besides some companies giving payback to clients, there are also ways to reduce your monthly premiums. We cover things like requesting a payment delay, suspending coverage, canceling your policy altogether, or removing yourself from the policy, are explored HERE. 

It should go without saying that the less risk you expose an insurance company to the less their coverage should cost. Hopefully in the next few days, all of the auto insurance companies will get in line with what these three companies are doing.