Allstate, American Family Insurance to Return Millions in Auto Premiums Because No One Is Driving Amid Pandemic

This week, Allstate and American Family Insurance both announced that they will return millions in auto insurance premiums. This is due to the reality that people are not actively driving, amid the current coronavirus pandemic. Altogether, the two companies will be giving back around $800 million to their customers.

According to CNN, Allstate has said that it will refund roughly 15 percent of premiums paid by its customers in April and May, which comes to a total of about $600 million. Allstate CEO Tom Wilson commented on the decision, saying, "Given an unprecedented decline in driving, customers will receive a Shelter-in-Place Payback." Wilson added, "This is fair because less driving means fewer accidents." Allstate customers in the US and Canada with personal auto insurance are eligible for the refund, even if their state does not have a stay-at-home order.

American Family Insurance says that it will be returning $50 per car that each household has insured with them. They will do this as a one-time payment. The company says that this will come to a total of around $200 million. Additionally, both Allstate and American Family have announced that customers who are experiencing financial issues, such as a loss of income, will be allowed to delay payments on their insurance premiums without facing a penalty, as long as they get in contact the companies first.

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Some have questioned whether this will be enough to make a difference for those affected, such as ValChoice CEO, Dan Karr. ValChoice is a data analytics business, that primarily serves as an insurance industry watchdog. "I think it's great what Allstate did. But where's the rest of savings?" Karr said, adding that he believes American Family Insurance's refund will likely equal even less of the average premium than Allstate's goal of a 15 percent decrease.

However, there are other consumer protection groups who have praised the move such as Consumer Federation of America. J. Robert Hunter, director of insurance for the organization, said, "Is it enough? Probably not. [But] Allstate and American Family deserve praise for their industry leadership on this vital first step." He went on to say, "While it's too early to tell if the amounts promised are enough to reflect the big drop in auto accidents, the actions by American Family and Allstate are the right thing to do to help policyholders beleaguered by Covid-19 restrictions and job loss." Hunter concluded his statement by saying, "We urge other insurers to take similar actions quickly."