Coronavirus Car Insurance Rebates

(Image credit: (C)Oleg Albinsky ((C)Oleg Albinsky (Photographer) - [None])

The coronavirus pandemic has torpedoed the economy, our health care system and our everyday lives, but here’s some good news: There’s a good chance you’ll pay less for your car insurance.

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With fewer drivers on the road, and therefore fewer claims, U.S. auto insurers are lowering insurance rates, through credits against future premiums or refunds of money already paid. American Family Insurance, which writes policies mainly in the Midwest, was the first insurer to act, offering one-time $50 refunds for each insured vehicle. Since then, all of the major auto insurers have offered some form of relief. And more discounts could be coming if millions of Americans continue to work from home and avoid non-essential travel. A study by the Consumer Federation of America, an advocacy group, and the Center for Economic Justice, an insurance, credit and utilities advocacy group, concluded that the relief offered so far is insufficient given the likely drop in insurance claims.

Insurers have adopted different approaches to premium relief. For example, Allstate and Liberty Mutual granted 15% refunds on premiums for April and May, while Geico announced a 15% refund, but only as customers’ policies come up for renewal between April 8 and October 7, 2020. State Farm, the largest U.S. auto insurer, said customers can expect to receive a credit of about 25% on premiums paid from March 20 through May 31. USAA will provide a 20% credit on two months of premiums while Progressive and Farmers announced a 20% and 25% refund, respectively, for the month of April.

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If your mileage has decreased significantly and your insurer hasn’t offered any refunds or credits, contact your provider and ask for a rate that reflects your lower risk, says Doug Heller, insurance consultant for the Consumer Federation of America. If you’re unable to get results, don’t cancel your policy until you’ve found one to replace it. In most states, if you go without coverage, insurance companies will charge you more once you return to the market, he says.

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Emma Patch joined Kiplinger in 2020. She previously interned for Kiplinger's Retirement Report and before that, for a boutique investment firm in New York City. She served as editor-at-large and features editor for Middlebury College's student newspaper, The Campus. She specializes in travel, student debt and a number of other personal finance topics. Born in London, Emma grew up in Connecticut and now lives in Washington, D.C.