Insurance companies to refund, credit premiums to drivers during coronavirus pandemic

Several auto insurance companies across the country said they will refund or credit at least $6.5 billion in premiums to drivers through May due to the COVID-19 pandemic, the Consumer Federation of America reported.

Companies are seeing fewer insurance claims due to the lack of drivers on the road since stay-at-home orders have been implemented, the CFA said.

In some areas, auto accidents dropped by more than 50% as concerns over the coronavirus grew.

Drivers won't see their entire premiums refunded, but they will see lower bills for the months of March, April and May. Some of the country's 35 largest insurance companies have already voluntarily started implementing credits and discounts, including State Farm, Allstate and American Family.

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The CFA calculated how much smaller insurance companies could provide relief for their policyholders based on their claim reductions.

  • CFA says if policyholders have a one-third drop in claims, premiums should drop by 26%
  • CFA says if policyholders have a 50% drop in claims, premiums should drop by 39.4%
  • CFA says if policyholders have a 67% drop in claims, premiums should drop by 52.8%
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