With most states under shelter-in-place orders, there are far fewer cars on the road. Less driving translates into fewer accidents, which means fewer claims filed with insurance companies.
The nation’s major auto insurers have responded to the situation by providing relief to policyholders, especially in the form of credits or direct rebates on their premiums.
Most insurers will provide a credit to customers, ranging from the 15% offered by GEICO, Allstate, Liberty Mutual to 25% from State Farm, Farmers and 21st Century, although State Farm said the figure will vary by state. American Family and Nationwide are offering a one-time refund of $50 per policy, which the latter said averages out to 15%. USAA and Progressive are offering 20% credits. Most of the companies are offering the credit for two months.
That adds up to serious cash. State Farm, the nation’s largest auto insurer, said its total credits will reach $2 billion, while GEICO said its average of $150 for auto insurance policyholders and $30 for motorcycle insurance will total $2.5 billion as the company is providing that credit from April 8 to Oct. 7.
Most of the insurers will be providing this money as a direct credit on premiums, although American Family plans to print and distribute 2.3 million checks within 60 days.
Insurance company executives agreed that the unusual circumstances combined with the reduced costs of less driving made offering financial assistance an imperative, especially in an industry that is regulated on a state-by-state basis.
“This ongoing situation impacts everyone, and we want our policyholders to have some peace of mind knowing we’ll be there when they need us most,” GEICO President and CEO Todd Combs said.
“We understand how difficult and uncertain people’s lives are right now,” Progressive President and CEO Tricia Griffith said. “While auto insurance might not be the most pressing topic on everyone’s mind, we know that finances could be.”
“We understand the impact this pandemic is having on our country, and especially our military community and their families, many of whom also are working on the front lines of the crisis. Returning premiums provides timely help for our members,” said USAA President and CEO Wayne Peacock. “USAA has been facilitating the financial security of military members for nearly 100 years, and this is another way we can serve them well.”
Premium credits and rebates are not the only ways auto insurers GEICO, Progressive, Farmers, 21st Century and USAA have paused cancellations of policies because of a failure to pay, and almost all of them are offering payment plans.
With more drivers using vehicles to deliver products because of an increase in take-out and delivery services, several companies, including Progressive, Allstate, Farmers, 21st Century, USAA, Liberty Mutual, Nationwide and American Family, have expanded coverage to customers using their vehicles to deliver food or medicine. The expanded coverage is not ordinarily part of personal insurance policies.
Waiving late fees and deferring deductibles are common responses to the crisis for auto insurers, while Progressive is providing enhanced roadside assistance, expedited tow service and repairs, pick up and delivery of repaired vehicles and rental vehicles for first responders and health care workers who experience an accident.
Citing increased exposure to cybercrime under shelter-in-place orders, Allstate is making its Allstate Identity Protection product free for the rest of the year with no opt-out requirement. This product helps protect against identity theft and financial fraud and provides more control over information shared digitally.
The auto industry’s reaction to the pandemic is a combination of direct financial relief for all customers and a broad leniency toward those experiencing financial issues.
“For more than a century, we’ve made it our goal to be there for people when they need us most,” Liberty Mutual Chairman and CEO David Long said. “Today, more than ever, we recognize the uncertainty and financial challenges our customers are facing. We remain dedicated to serving our customers during this unprecedented pandemic, and we hope our premium relief and other actions we have taken to offer support help to alleviate some of their worries.”