One side effect of the whole country being in quarantine due to the COVID-19 pandemic is a dramatic decrease in driving. The dropoff has been so dramatic that there’s been an astounding 30% drop in air pollution in the Northeastern U.S. But it also means that you’re paying insurance on something collecting dust in a time when money is tight; the national average for car insurance for someone with a good driving record and good credit is $119 a month. But there’s good news: Several of the biggest auto insurance companies in the U.S. are now offering a refund on premiums.
“We've seen auto insurance companies proactively reach out to consumers and say, because people aren't driving or driving less right now, we're going to automatically refund a certain amount,” says Kimberly Palmer, a personal finance expert at NerdWallet.
Palmer believes this is the first time auto insurance companies have done something like this, which speaks to what an unprecedented period we’re living through. “What's nice for consumers here is that it's automatic. So you don't actually need to do anything,” she says. “You don't have to call, you don't have to email — the refunds or process or will be depending on when it renews automatically.”
However, it won’t be a full refund and it won’t apply to everyone. “I want to clarify that it's not all auto insurance companies that are doing this,” she says. “I have Geico and they sent an email out a couple of weeks ago explaining that they were doing this.” State Farm, Allstate and Liberty Mutual are among the other large companies giving refunds. For premiums you paid in March, April and May, you may be eligible for a refund of a one-time flat-rate payment (some companies, for example, are refunding $50) or a percentage often ranging between 15% to 25%. State Farm, the biggest auto insurer in the U.S., is offering a 25% refund on payments between March 20th and May 31st. This applies even if you bought State Farm auto insurance after March 20th, or you’re a potential customer looking to get insured now. If you’re interested in getting a new auto insurance policy, now isn’t a bad time to look, as some companies are offering discounts. “If you take out a new policy, you'll see that it's a lower rate,” says Palmer.
If you haven’t seen an auto insurance refund automatically yet, it’s definitely worth reaching out to your company and asking if a partial refund is possible.