Product News and Recalls

Strange Times Indeed: Car Insurance Companies Refunding Payments

car insurers issue refunds as travel drops amid coronavirusAt this point, there can’t be too many people who don’t know what flattening the curve means. We’ve all been given tools and knowledge to try do our part to lessen the impact of the COVID-19 pandemic on our communities and families. Instructions to stay home, avoid groups, maintain proper social distancing, and the closure of non-essential businesses across the country have led to a new sense of “normal” for the time being as people put plans on hold and add facemasks to their wardrobe.

Ventures to the grocery store and other essential outings have been made easier by a significantly lower number of cars on the road at any given time. In fact, some statistics indicate that Americans are driving 35% to 50% fewer miles these days since the middle of last month. And, when that many cars remain parked in driveways and parking spots, the number of collisions is bound to fall as well.

As a result, insurance companies are seeing drastic decreases in the number of claims filed which has led them to a huge influx of cash. The very nature of insurance made such a windfall all but inevitable. Customers pay premiums while the insurance company negotiates and pays claims. When there aren’t as many claims to pay, there’s no outflow of money.

Some insurers are refunding portions of those premiums back to their customers. Allstate is sending 15% of premium payments back to most of its customers for the months of April and May. Even smaller insurers like Madison, Wisconsin-based American Family are issuing refunds. The small insurer writes policies in 19 states and is refunding $50 back on each vehicle it covers. “We are sharing it back right now when our customers probably most need it,” said company chief operating officer Telisa Yancy.

The moves illustrate just how complicated the impact of this pandemic will be for the various sectors of the American economy. While some insurers scramble to handle unprecedented numbers of unemployment and health insurance claims, auto insurers are spending time trying to send money back to their customers.

We live in strange times.