COVID-19, commonly known as the coronavirus, has struck communities around the world with sickness, and in too many tragic cases, death. Almost every country in the world placed drastic measures on their residents in order to reduce the spread of the contagion. The longer lasting impact of this crisis is likely to be the financial ramifications, affecting every industry.
But certain groups currently offer relief (some compelled by government actions), and this extends to the car insurance industry. Traffic in America is down by fifty percent, which was to be expected with a national shutdown. Because fewer people are driving, insurance underwriters are trying to give back.
AAA Offers Major Relief
AAA, the ubiquitous automotive club, announced that it is offering $125 million to help motorists still paying insurance premiums despite not driving their cars and incurring risk. This affects 21 different states. Policyholders can expect a twenty percent refund for this year. The payments are expected to go out before the end of May.
In addition, they currently offer their famous roadside assistance to first responders and medical professionals for free during this time. They have also made substantial charitable donations to assist with relief in other ways.
Other Insurers Trying to Help
AAA is only one of many different companies trying to help. All of the major car insurers have offered some sort of relief to their customers. Allstate offers over fifteen percent of paid premiums back to their customers, while Farmers Insurance reduced their premiums by twenty-five. Geico offers a fifteen percent credit for new policies taken out this year, and Nationwide is giving a one-time refund of $50 for each policy.
Progressive, State Farm, Liberty Mutual and others plan to send refunded premiums between fifteen and twenty-five percent during this time. The state of California has ordered insurers to offer refunds during this time, so to be sure some of this has been the effect of that order. However, these big companies are extending their offers around the country, not just in California.
Moving Forward
There are some indications that the crisis could be coming to an end, the social distancing orders and national shutdown seem to have done their work. If that is the case, these insurers may not need to do much more beyond this. There is always the chance of another outbreak, however, and until a vaccine and appropriate medications are developed, this scene could be played over again.
With so many cars sitting idle, some concerns include maintenance issues arising over these weeks and months. So perhaps more refunds and payouts are coming in the future. If other states follow California’s lead in ordering insurers to pay back premiums, this could have a much larger impact than has already taken place.
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