As the coronavirus pandemic has emptied out U.S. streets while Americans stay home, there are less drivers on the road. Less driving means fewer car crashes and fewer car crashes means big savings for auto insurers. Two car insurers in the U.S., Allstate and American Family Mutual, have decided to pass those savings along to their customers.
Allstate, the country’s fourth biggest car insurer, said it would give back $600 million in total to customers and American Family Mutual is planning to refund $200 million. Both insurers have seen a huge drop in accidents as more and more people stay at home and off the roads. Compared with last year, claims were down 20% to 40% weekly from March 11 through April 3. In addition, the insurers estimate that policyholders drove 40% fewer miles in the last three weeks of March. With millions of households financially strapped during the lockdown, the refunds come at a good time for many.
Allstate will pay customers back in two ways – drivers in quarantine will receive refunds while most customers will be given a 15% discount on monthly premiums for April & May. American Family is returning $50 per insured vehicle. Many insurers are extending payment plans and waiving late fees as ways to help customers through the tough times and Allstate said it also is providing its identity-theft product free for the rest of the year “to all Americans.”
The refunds of these two companies could put pressure on other insurers to also follow suit due to the decrease in driving. Some other insurers, while not yet offering across-the-board pandemic rebates, can adjust premiums on a case-by-case basis for drivers who are suddenly not driving.
With the amount of commuters now working from home, quieter roads lead to fewer accidents and therefore, fewer claims. Since the auto-insurance industry is a rare bright spot while many other industries flounder right now, it’s nice to see them passing some of their savings along to their customers. For those stuck at home and struggling financially, these refunds are sure to help. However, if you have essential work that keeps you on the road, stay safe out there!