Auto Insurance Refunds For The Coronavirus Pandemic (COVID-19)
Are Auto Insurance Companies Giving Refunds Due To The Coronavirus Pandemic?
You may have head rumors that auto insurance companies will be giving refunds because of our current coronavirus, or COVID-19, pandemic. The insurance companies are offering refunds because most of us are using our vehicles less during the state mandated shelter in place orders. Most are referring to them as their Shelter In Place Rebate.
It does make sense. We can look at the roads during the day and see the drastically reduced traffic. This is due to several reasons, including:
- Non essential business closures
- More essential employees are working from home
- People are doing business online whenever possible (shopping, banking, making payments to companies, etc.)
Because of this, most of the nations state insurance commissioners made a recommendation to the auto insurance companies to offer lower rates during the shelter in place periods. We have come to expect that when the insurance commissioner makes a recommendation, companies usually listen. And they did listen as most companies have started offering auto insurance premium rebates for this coronavirus pandemic period.
How are auto insurance carriers providing these refunds due to coronavirus?
The insurance companies were not mandated to provide the refunds for auto insurance. Because of this, each auto insurance company is handling their coronavirus refund process differently.
If you have outstanding premiums due on your current auto insurance policy, most companies are simply crediting the amount of your refund either your May payment or crediting your May and June payments respectively.
If you had already paid your insurance premiums in full, most auto insurance companies are providing the refunds back to you in the same manner in which you paid your premiums.
So what does that mean?
If you paid your insurance premiums via credit card, the company will provide a credit back to the card that was used to pay the premiums.
If you paid via cash to your agent or via check, the auto insurance company will most likely be cutting you a check for the refund amount. Keep in mind that checks can take two to three weeks to get cut and mailed from an insurance company.
If you paid vie direct debit from a checking account or auto EFT, then it is up to your specific company as to how they will be refunding the premium. Most companies will be sending a check to you for your refund. The reason is that most of the forms that are signed to set up auto EFT payments or even one time payments, are for debits only. If the form does not give permission to credit your account, then the company cannot offer the credit in a direct deposit format. For the ones that do address the credit, they may be refunding your premium directly to your bank account.
How of an auto insurance refund should you be expecting?
Most are providing a 15% refund of the April and May insurance premiums. Keep in mind that this may not be the the same as 15% of your payment amount. Most insurance companies do not offer a payment plan that is 12 equal payments. And the wording of the rebate is “15% refund on two months of their annual auto premium as of …..”
Here is a simplified example showing the difference in calculation:
- Say your auto insurance premium is $1,200 for the year. A lot of payment plans are 10% down and 9 installments. So in this case, your “monthly” payment for April and May would be $120 per month. So you may be thinking that your rebate will be 15% of $240 or $36
- But let’s look at what is the true “monthly” premium. If it is a 12 month policy and the premium is $1,200, the actual monthly premium for the policy is $100 per month. So your rebate may actually be 15% of $200, or $30.
You can see that there may be some confusion over the actual amount of the refund based on these two calculation methods. From what I am hearing, the companies are using method number 2 to calculate. That method will provide the same percentage benefit to each client, regardless of what billing plan they have chosen.
Here is a list of auto insurance companies and their current refunds being offered (all are subject to state regulator approval):
- SAFECO Insurance – 15% of two months of auto insurance premiums in as of 4/7/2020
- Travelers Insurance – 15% of April and May auto insurance premiums for policies that are in force anytime between 4/1/2020 and 5/31/2020.
- Nationwide Insurance – $50 flat refund for policies that were active on 3/31/2020
- Progressive Insurance – Auto customers who have a policy in force as of April 30th will be credited 20% of their April premiums in May. Personal auto customers with a policy in force as of May 31st will be credited 20% of their May premiums in June.
- Encompass – 15% of monthly premium for April and May for policies in effect on 3/31/2020
- The Hartford – 15% of two months auto insurance premium for policies in force as of 4/1/2020
Is your auto insurance company is on this list? If not, reach out to them to see if they are offering any kind of rebate program similar to these.
Have you been affected by COVID-19? Are you having trouble making your insurance payments? If so, most companies will work with you to make payment arrangements. See our blog and video below regarding making arrangements for your insurance payments.
Check out our other blogs regarding the coronavirus pandemic. There are several resource links on COVID-19. Also, there is advice on how the different actions can affect your personal and business insurance.
How can the coronavirus pandemic affect your personal insurance?