The drop in car accidents — and in insurance claims for crashes — has been among the few bright spots of the coronavirus epidemic. But while insurers have already automatically passed along some of their savings to customers, you may need to work to get back all the money you’re entitled to.
Time spent at the wheel is down by a staggering 88% since March, according to a survey by carinsurance.org. Accidents aren’t down by quite as much, say experts, in part because of increased speeding on the emptier roads. Still, to cite one example, accidents dropped in half in California — from 1,000 to 500 a day — during the first month after the statewide stay-at-home order went into effect, according to the Road Ecology Center at U.C. Davis.
Some savings from reduced accidents have already made their way to car owners. Insurers issued rebates or credits of about $50 or so per car to account for the companies’ savings in March and April, and a few insurers have provided further relief for May. Some, too, say they will retroactively give back more of their 2020 savings by delivering coronavirus-related discounts of 10% or so, starting in late summer, when policies are renewed.
However, consumer advocates and some state insurance commissioners say some of the promised relief isn't broad enough, or isn’t arriving at the right time or in the right form. Here are some of the issues they’ve highlighted that could mean you get less relief on car insurance costs than you’re entitled to due to coronavirus. We also cover some steps you can take to mitigate those problems and keep your 2020 insurance premiums as low as possible.
The Spring Givebacks May Have Been Too Small
It’s not often that the insurance company brings good news, which made this spring’s credits and rebates all the more welcome. But those givebacks may have fallen short of the actual windfall insurance companies enjoyed.
The Consumer Federation of America says their analysis of traffic and accidents indicates that a 30% reduction in premiums was in order for the last two weeks of March, as well as April and May. Yet, as the association points out, only a few insurers offered relief of 25% or more for at least two months; most provided 15% givebacks, for just two months, ignoring March.
Other stakeholders, however, point out mitigating factors for insurers when it comes to auto-insurance risk. In a webinar hosted by the Insurance Institute of America, a spokesperson for Cambridge Mobile Telematics noted that while miles travelled are down, speeding and distraction both peaked in April, based on CMT’s analysis, and fatalities are up. Other industry spokespeople have pointed out additional risks arising from COVID-19, such as some insurers allowing privately insured cars to be used for upstart delivery services.
You May Not Get Relief for Low-Driving Summer Months
Call it a potential summer soaking. With some insurers, there’s a gap between the relief issued, or at least promised, for the spring months and the savings that have been promised when policies are renewed in the late summer or fall. And this is despite the fact that driving might remain below normal levels for some time, as the coronavirus effects continue.
Some insurers are already extending their earlier premium givebacks. Allstate and USAA have extended their monthly relief for April and May into June. USAA has pledged a rebate for May driving and to continue monitoring claims, and passing along month-by-month relief if the numbers merit it.
But other insurers are making no promises yet about relief in summer, when driving could well continue to be depressed. State Farm, which issued credits for 25% of premiums paid for March to May, recently promised average national rate reductions of 11% — but only beginning with policy renewals in August or September. The company has made no promise to alleviate excessive rates between June 1 and whenever customers can take advantage of the rate cut. American Family has promised a 10% rate reduction for personal auto policies in force between July and December 2020 — leaving open whether they’ll relieve the high rates customers paid in May and will pay in June.
Companies who have not yet committed to summer relief as needed have drawn attention from consumer groups. For example, while praising State Farm’s relief to date, Consumer Federation of America Insurance Director Duncan Hunter points out a timing gap between the givebacks awarded for March and April and the summer or fall dates when State Farm’s 11% rate deduction kicks in. “There is a COVID gap where rates will clearly be very excessive,” said.
Some Givebacks Tie You to Your Current Insurer
Many insurers issued their premium givebacks in the form of refund checks. Those are both a rapid solution and one that allows you easily to shop around for insurance when your policy is up for renewal — and perhaps save on your premiums by doing so.
Other companies, however, have promised their relief in the form of a statement credit, against the future purchase of insurance. That approach begs the question: what happens to the credit should you choose to switch insurers when your current policy expires?
The wording on some company websites is vague, perhaps in an effort to discourage shopping around and the temptation to switch carriers. That said, Douglas Heller, an insurance expert with Consumer Federation of America, said in an email that almost all companies will provide the giveback “as a refund to anyone who was a customer during the spring, even if they don’t renew in the future.”
But there are companies who are not following that policy, including GEICO and Chubb. The FAQs for the GEICO Giveback Program are very clear that “if you choose not to renew your policy, or cancel your recently purchased policy as of the policy effective date, the GEICO Giveback will not apply.”
That policy has drawn criticism from consumer groups. “Current policyholders deserve the relief on their current policies,” said Birny Birnbaum, Executive Director of the Center for Economic Justice (CEJ). “Why should people have to wait until their policy renews in October to get relief for a massive drop in claims today?”
Also, Michigan’s insurance commissioner this week issued an order requiring insurers in the state to issue refunds or explain why they are not doing so. And CFA’s Heller says one of its member organizations, the Consumer Federation of California, has filed formal petitions in California challenging the requirement to renew in order to get a refund.
What To Do
Communicate with your insurer — and complain as needed. Auto insurance companies are eager to retain customers, especially if they’re good drivers. So if, for example, you’re a GEICO customer who resents the possibility of losing your covid-19 premium giveback when you renew, let the company know. If your company hasn’t reassured you that you’ll get further premium relief if you drive less in May, June and beyond due to coronavirus, ask them to confirm that.
Plan to shop around. You can’t renew auto insurance early, but you can and should you plan to shop around when your policy expires. If your insurer or agent hasn’t rebated your spring savings, contact them well ahead of your renewal date and confirm that any account credits you have will be refunded should you choose to switch companies. Consider asking for a commitment in writing if the answer you get is negative, or even ambiguous. You might also want to sign up now for news updates from your insurer on its website or through its mobile app.
Access information from your state insurance commissioner. These public servants administer the insurance marketplaces in their states, including regulating premiums and consumer policies. As noted, commissioners in some states have already been active in mediating between the insurance industry and consumers and consumer groups to help resolve coronavirus-related issues.
There could be more to come, says CFA’s Hunter, as commissioners continue to gather data such as premiums, claims, exposures and such to test that the discounts from March to at least September have been adequate.
But the level of engagement by commissioners, at least publicly, has varied a lot from state to state. Check the list of commissioners for the one in your state and check their website or use their information line to get clarity on their positions on these issues — and perhaps to advocate that they do more.