A four lane highway empty of vehicles

Auto Insurers Return Premium as Coronavirus Keeps People Home

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With most Americans sheltering at home due to the coronavirus outbreak, the roads are quieter and safer.

That development has many major auto insurance companies returning millions of dollars to policyholders. Allstate, Geico, Liberty Mutual, Progressive, State Farm, USAA, and American Family Insurance have all recently announced premium breaks.

“We insure more cars than anyone, and we see from our claims activity people are driving less,” said Michael L. Tipsord, chairman, president and CEO of State Farm, in a statement. “This dividend is one of the ways we’re working to help our customers during this unprecedented situation.”

Here is a breakdown of the major discounts:

  • Allstate said most policyholders would get back 15% of their premium in April and May
  • Geico said auto and motorcycle policyholders would receive a 15% credit
  • Auto customers of Liberty Mutual and Safeco will receive 15% refunds on two months of their premiums
  • Progressive customers will receive a 20% credit in April and May
  • State Farm said its auto customers can expect to earn a credit of 25% on their premium from March 20 through May 31
  • USAA said members with auto insurance policies would get a 20% credit on two months of premiums
  • American Family Insurance said they would make a payment of $50 per vehicle covered by one of their policies, with an average payment of $100

According to the Federal Highway Administration, people driving to and from work make up close to a third of all vehicle miles.

With so many people staying and working from home, Dan Karr, CEO of ValChoice, a data analytics company, calculates that reduced accidents could push insurance claims down by more than 85%.

Karr told CNBC he believes many insurance companies are still charging too much during this global health crisis. 

While your car may be gathering more dust, experts say you should resist the urge to cancel your policy. Some insurers charge more if you’ve had a lapse in coverage.

“You don’t want to compound this crisis by having an uninsured accident,” Douglas Heller, an insurance expert at the Consumer Federation of America, told CNBC.