At least two auto insurance companies say they will refund Americans some of their monthly premiums as millions stay at home due to the coronavirus outbreak.
The New York Times first reported Tuesday that insurers Allstate and American Family Insurance say they plan to refund part of customers’ monthly fees, a response to savings the industry is reaping as a result of fewer cars being on the road.
In a statement released on American Family Insurance’s website, company executives said that the refund would amount to a one-time credit of $50 per vehicle for customers.
“We are taking the unprecedented action to help our customers by providing a one-time $50.00 payment for each personal automobile insured with us through our premium relief payment. Why? Because with fewer cars on the road these days, there are less miles being driven and that means there will be fewer accidents,” the company said.
“Because so many people are experiencing financial hardship now, we are working to get these payments issued as quickly as possible. We have received regulatory approval in Wisconsin and will begin mailing checks the week of April 6, 2020. Checks will be sent to customers in our other operating states pending regulatory approval,” the company continued.
Allstate representatives explained on the company’s website that customers would receive, on average, 15 percent of their monthly premiums refunded for the months of April and May.
“Given this decline in driving, we are announcing the Allstate Shelter-in-Place Payback of more than $600 million in April and May for our auto insurance customers,” the company said.
Allstate’s CEO Thomas Wilson told the Times that the company was seeing “significant” changes in the number of claims it serviced just days into the coronavirus outbreak in the U.S.
“After one week’s worth of data came in, we knew this was significant,” Wilson said. “And it was less than two weeks from when we first saw the data to when we made this announcement.”
A spokesman for American Family Insurance told the newspaper that the company was basing its refund policy on what little information it could gather about what the industry would look like in the months ahead.
“We’re returning to our customers estimated savings based on our best determination of what we know now,” said Ken Muth. “We’ll continue to focus on aligning what we charge in premium to the expected costs associated with providing the insurance coverage, which is primarily paying out claims.”
The coronavirus outbreak has sickened more than 378,000 in the U.S., causing governors around the country to issue stay-at-home orders while shuttering schools and nonessential businesses.