As millions of Americans stay home to help slow the spread of the novel coronavirus, the number of cars on the road is down significantly. Overall driving mileage decreased by 35 to 50 percent since states first implemented stay-at-home and shelter-in-place orders last month, according to an analysis from Allstate.
As fewer drivers take to the roads, the number of accidents is on the decline, too. In response, auto insurers including Allstate are issuing customer refunds to provide some financial relief at a time when more Americans are likely unemployed than ever in history.
Allstate plans to issue more than $600 million in refunds over the next two months, which will apply to 18 million customer policies, the company announced on Monday. This equates to roughly 15 percent of a customer's average monthly premiums in April and May, and the company may consider another round of refunds if shutdowns continue, a spokesperson told CNN. Additionally, customers facing financial hardship due to the coronavirus pandemic can delay two payments without penalty or pay only what they can afford, the company said.
"This is about fairness," Allstate CEO Tom Wilson told NPR. "This is about doing it and not waiting to be asked."
“Allstate has been helping customers overcome catastrophes for 89 years since our purpose is to make sure they are in good hands," Wilson said in a statement on Monday. "We have learned to move quickly and put people first.”
Along with the so-called Shelter-in-Place Paybacks, the company opened up its Allstate Identity Protection product for all U.S. residents for the rest of the year, regardless of whether they are current customers.
"Shelter-in-place orders require us to work, take classes and visit friends virtually, which increases our exposure to cybercrime," the company's statement reads. Indeed, security vulnerabilities on teleconference apps like Zoom are well documented. And authorities have noted an uptick in scams related to the pandemic, from fake testing resources to fraudsters gathering personal information under the guise of verifying federal stimulus checks.
“We are seeing fraud across the board, everything from low-tech to very sophisticated schemes,” G. Zachary Terwilliger, U.S. attorney for the Eastern District of Virginia, told the New York Times. U.S. residents can get Allstate's free identity protection through Dec. 31, 2020, by signing up in April or May, the company said.
American Family Insurance, a smaller Midwestern insurer based in Madison, Wisconsin, will send out its own set of rebates of $50 per car for more than 2 million customers, the company announced separately on Monday.
"The COVID-19 pandemic has left a path of devastation across our planet. Many are suffering personally, financially and physically. Shelter-in-place orders and other social distancing also means folks are driving less," the company's CEO Jack Salzwedel wrote on LinkedIn. "As a result, we believe they’ve overpaid in their premiums. It’s our duty to return that premium, because it belongs to them."
The company is also suspending late fees and cancellations and offering payment deferral for customers who can't afford their premiums. “We want to do our part to help during this trying time," said COO Telisa Yancy.
Other auto insurers including USAA, Progressive and Farmers are also extending grace periods, allowing payment deferrals, and suspending late fees and cancellations in response to the pandemic.
Telling customers you won't cut off their policies during a public health crisis is arguably the bare minimum of what companies should be doing. But the move to issue refunds stands out at a time when many have found the corporate response to be lacking. Still, consumer advocates warn it's far from enough and encouraged companies to continue getting creative about ways to offer relief to customers who are struggling financially.
"Is it enough? Probably not," J. Robert Hunter, director of insurance for the Consumer Federation of America, told CNN. "[But] Allstate and American Family deserve praise for their industry leadership on this vital first step."
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