How About Some Good News for a Change? Auto Insurance Rebates Are Coming
Just how big is the coronavirus? It’s just 125 nanometers. For perspective, a human hair is 80,000 nanometers thick. That dollar bill you are trying to so wisely spend is pretty thin, right? It’s 100,000 nanometers.
Miniscule but massive, the coronavirus is having an outsized impact on lives and budgets. Though there’s not an overwhelming amount of good economic news just now, there is one small glimmer of relief. Auto insurance companies are giving dollars back to their customers in the form of COVID-19 refunds.
Insurers base their premiums on the number and cost of claims they get. With fewer miles driven, those claims are going down.
The top ten insurers have announced plans to return more than $7.5 billion. Though that’s a lot of cash, watchdog groups are asserting the insurance industry could be doing more. These companies are saving tens of billions of dollars even after accounting for the money they are giving back.
How Large Are The Refunds?
The refunds range from around 15% to 25% of premiums, though the timeframes and, therefore, the amounts differ. For example, Farmers Insurance Group of Companies is offering its policyholders a miserly decrease based on one month, while Geico is much more generous, refunding six months’ worth, nearly $2.5 billion.
The largest insurer, State Farm, announced it would return 25% of premiums for a period of 10 weeks, from March 20 through the end of May, a $2 billion reduction in premiums. State Farm, a mutual insurance company, is owned by its policyholders and is calling the payment a dividend.
Most insurers are basing relief on payouts for the premiums paid in April and May. The fourth-largest insurer, Allstate, was the first to announce reduced payments to its policyholders for these two months, quickly followed by announcements from Progressive, USAA, and Liberty Mutual.
Further assistance related to the pandemic includes allowing policyholders to defer payments and pausing cancelations due to non-payment of policies.
It may not be sufficient to satisfy consumer protection groups or enough to make much of a difference in your bank account, but the total amount is quite a pile of cash. If you stacked the total payout announced so far—$7.5 billion—in one-dollar-bills, it would climb over 500 miles into the sky or something like 750 trillion nanometers.
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