Are Auto Insurance Carriers Giving Refunds Due To COVID-19?

You have heard the rumors that auto insurance companies are giving refunds because of our current COVID-19 pandemic. Insurance companies are offering refunds because most of us are using our vehicles less during the state mandated shelter in place orders. Most companies are referring to them as their Shelter In Place Rebate.

This make sense; look at the roads during the day and see the drastically reduced traffic. This is due to several reasons, including:

  • Non-essential business closures
  • Layoffs
  • More essential employees are working from home
  • People are doing more business online whenever possible (shopping, banking, making payments to companies, etc.)

Because of these reasons, most of the nations state insurance commissioners made a recommendation to the auto insurance companies to offer lower rates during the shelter in place periods. We have come to expect that when the insurance commissioner make a recommendation, companies usually listen. Which in turn most companies have started offering auto insurance premium rebates during the coronavirus pandemic period.

How are auto insurance carriers providing these refunds due to coronavirus?

Insurance companies are not mandated to provide refunds for auto insurance. Because of this, each auto insurance company is handling their coronavirus refund process differently.

Most companies that we work with are automatically crediting your premiums. If you have paid your premiums in full you will receive a refund by direct payment. If you pay your premiums monthly, you will see a credit on your April and May payments.

How much of an auto insurance refund should you expect?

Most of the insurance companies are providing a 15% refund of your April and May insurance premiums. Please keep in mind that this may not be the same as 15% of your payment amount. Most companies do not offer a payment plan that is twelve equal payments. They may use the wording for the rebate as “15% refund on two months of their annual auto premium as of…”

Below is a simplified example showing the difference in the calculation:

  1. Let’s say your auto insurance premium is $1200 for the year. Most payment plans require 10% down and it is split into nine installments. So your “monthly” payment for April and May would be $120 per month, so your rebate will be 15% of $240 or $36.
  2. Let’s look at what is the true “monthly” premium. If you have a twelve month policy and the premium is $1200, the actual monthly premium for your policy is $100 per month, in turn your rebate may actually be 15% of $200, or $30.

You can see how there may be some confusion over the actual amount of the refund based on the above calculation methods. From what we are hearing, the companies are using method two to calculate. This method will provide the same percentage benefit to each client, regardless of what billing plan they have chosen.

This is a list of auto insurance companies and their current refund programs being offered (all are subject to state regulatory approval):

  • Hanover Insurance: Returning 15% of April and May auto premiums to personal lines customers through The Hanover CARES Refund.
  • Kemper Insurance: Personal auto customers who have a policy in force as of April 30 will be credited 15% of their April premiums in May and customers with a policy in force as of May 31 will be credited 15% of their May premiums in June.
  • Progressive Insurance: Personal auto customers who have a policy in force as of April 30 will be credited 20% of their April premiums in May and personal auto customers with a policy in force as of May 31 will be credited 20% of their May premiums in June.
  • Safeco Insurance: Personal auto insurance customers will receive a 15% refund on two months of their auto premium, based on your premium amount as of April 7, 2020, through the Personal Auto Customer Relief Refund.
  • Travelers Insurance: Through their Stay-at-Home Auto Premium Credit Program, personal auto insurance customers will automatically receive a 15% credit on their April and May premiums.

If your auto insurance company is not on the list above, reach out to us directly. They may be offering some kind of rebate program, that we are not aware of as of yet.

If you are having trouble making your insurance payments, please give your carrier call directly. Most insurance carriers will work with you to make payment arrangements.

The state, country and world maybe walking at a different pace right now, but as always, we are here for you, even if it’s just to chat. Someone live will always answer the phone and help in any way we can. Stay safe and healthy. We will get through this.

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