The COVID-19 Pandemic Gifts Auto Insurers with Huge Payday Yet Insurers Resist Another Auto Insurance Refund
The global pandemic that has brought the world economy to a complete shutdown isn’t a net negative for all industries. Some are prospering but it is perceived to be at the expense of consumers.
The novel coronavirus and the lockdown that has followed in its wake have upended business practices around the world. As many industries struggle to stay afloat, one segment is reaping huge profits while everyone stays at home and that is the auto insurance industry.
Their profits are so healthy, in fact, that some consumers are wondering if an auto insurance refund would be appropriate since insurers’ collective risk was vastly reduced while most people weren’t driving around.
In response to that, some insurers did offer their customers rebates or some form of an auto insurance refund but consumer groups say the amount given falls way short of the funds collected by those same companies. While there is a question of fairness there is also a question of how much insurance is needed if no one is driving around on the roads. Not only are risks seemingly lower but if consumers aren’t driving, why would they need insurance.
Auto Insurance Refunds Issued
These auto insurers offered these refund percentage amounts to customers.
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And it isn’t just conjecture, either. There are real numbers to pack up the assertions that it is safer to drive during the lockdown than ever before. Consumer activist group Texas Appleseed noted that car accidents are down by nearly half when compared week by week with this time last year. Of the top 40 auto insurers in the state of Texas, the same group reports that at least one third aren’t offering any kind of auto insurance refund whatsoever.
While Texas Appleseed notes that these insurers cater to the high-risk, bad-credit market niche, there is still the implication that customers of all backgrounds deserve some kind of break during the unique economic conditions all drivers are facing. After all, the economic impact of COVID-19 has not only led to decreased business for most industries but also job losses. Another problem identified by Texas Appleseed is that insurers are often tying these rebates and auto insurance refunds to renewing the customer’s policy which eliminates the consumer’s option to shop around for a better rate.
That last aspect of the auto insurance refund/rebate being offered by insurers is what is really bothering consumers as many of them note that they would prefer having a lower monthly premium than a one-time discount or payment. Looking ahead, however, auto insurers aren’t so sure that these conditions will hold in perpetuity. When the lockdown ends and the pandemic’s impact begins to wane, business should return to normal as far as traffic goes.
Of course, the pressure from consumer interest groups is unlikely to cool down anytime soon. Whether or not this will have the impact that Texas Appleseed would like remains to be seen. But, if the pandemic continues and people refrain from driving, insurers could have a serious issue on their hands when it comes to how to deal with premiums now and in the future.
Now is a good time to review your auto insurance policy. You should make sure that you have the appropriate coverages. Review both your comprehensive coverage and collision coverage to see if these coverages are even needed. You should also check with other companies for quotes because some are offering better rates due to COVID-19. Some auto insurance carriers have adjusted premiums during this crisis, therefore, you might be able to save.
See if you can lower your rates in Texas by having an insurance agent shop around for auto insurance quotes for you. We have agents standing by to provide you with 3 solid quotes from 3 different companies. The agent will contact different companies, give them your information, and the insurance company will provide an accurate quote tailored to you.