Car Insurance Companies Start Offering Refunds Because Few Are Driving

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Work commute? Nope. Road trip? No way. Most of the country is staying home and driving less during the COVID-19 pandemic in a nationwide effort to flatten the curve.

With less traffic on the road, there have been fewer accidents and fewer car insurance claims. And the prospect of paying claims is what auto insurance base their rates on. Two car insurance companies have now stepped up to offer their customers refunds. More may follow.

Allstate Insurance announced “Shelter-in-Place Payback,” which translates into a 15% payback of monthly premiums for April and May. This payback applies to Allstate, Esurance and Encompass policyholders. Customers will receive the money back via a credit to their bank account, credit card or Allstate account.

The fastest way to get the payback is through the Allstate Mobile app, according to the company.

In addition to the payback, Allstate is also offering:

  • Free identity protection through the end of the year for U.S. residents, whether they are an Allstate customer or not.
  • Payment relief such as special payment plans and extended grace periods without penalties.
  • Extended auto coverage for delivery drivers. Typically, using your personal vehicle for deliveries, such as takeout food, groceries and other items, is not covered by personal car insurance policies. Allstate has temporarily extended coverage to personal auto policies for customers who are delivering food, medicine and other essential items during the COVID-19 pandemic.

Read more on deliveries and car insurance.

Allstate says it will payback more than $600 million to its customers in the next two months.

American Family Insurance Refunds

American Family Insurance will give a one-time $50 payment for each vehicle insured with them in response to the COVID-19 pandemic. The company says that customers who have a private passenger policy in force as of March 20, 2020, will be eligible for the refund. Customers who have Classic and Advance policies are also eligible.

The following vehicles are not eligible for the one-time payment from American Family Insurance

  • Cycles
  • Campers
  • Personal trailers
  • Motor homes
  • Specialty vehicles, such as golf carts, mini-trucks, personal mobility devices, snowmobiles, tractors and farm machinery
  • Vehicles not owned by the customer but covered under a non-owner car insurance policy

American Family Insurance customers will receive refunds by check. Customers in Wisconsin can expect checks to be issued during the week of April 6, 2020, and customers in other states can expect checks pending regulatory approval.

In recent weeks, consumer groups urged insurance companies to issue refunds to policyholders. Allstate and American Family Insurance are the first companies to do so.

Many insurance companies have responded to the COVID-19 pandemic with options to help reduce customers’ financial burdens, such as extended grace periods for missed payments, payment plans, and waiving late fees and penalties.

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