Auto insurers Allstate and American Family Insurance announced Monday they're giving back some $800 million in premiums to customers in recognition that many are not driving much during the novel coronavirus outbreak.
Why it matters: The payments their customers will receive are not vast amounts, but the "nature of the action is exemplary — and rare — given the context of a pandemic," notes the New York Times, which surveyed nine other auto insurance firms to see if they would follow their rivals' lead.
The latest: Nationwide announced on Thursday it will offer a one-time premium refund of $50 per policy for personal auto policies active as of March 31.
Consumer groups applaud Allstate's and American Family’s Shelter-In-Place Paybacks, urge other auto insurers to follow. This action by Allstate and American Family reflects a huge drop in claims from the lowered risk of significantly fewer miles driven. https://t.co/ryRnKr1O8V
— Consumer Federation of America (@ConsumerFed) April 6, 2020
By the numbers: Allstate said most customers will receive 15% of their monthly premium in April and May as part of a "Shelter-in-Place Payback," totaling more than $600 million, as the firm noted that "less driving means fewer accidents."
- American Family will pay $50 per vehicle covered by clients' personal auto policy, costing about $200 million in total.
Of note: A Progressive spokesperson told the NYT that plans would be in place soon on "how to best return some premium to customers," while a USAA representative said the company was "exploring options" and an announcement was expected in "the coming days."
- A State Farm representative told the Times the firm was weighing "how best" to "return value to our auto insurance policyholders," with a decision expected by the week's end.
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