State Farm will give auto insurance customers a 25% discount on premiums until May 31, the company announced Friday in a move that returns $2 billion to policyholders. The discount marks the latest auto insurer to offer relief to drivers who are now idling at home during the growing coronavirus pandemic.
The discount will appear automatically on customer accounts as a credit, the company said. State Farm is providing its discount because "we see from our claims activity people are driving less," CEO Michael Tipsord said in a statement.
Some of the nation's largest auto insurers said this week there are fewer drivers on the road, a direct result of state and local governments enacting shelter-in-place advisories. Customers should not have to pay full premiums if they're not driving as much as they normally would, the insurers said after consumer advocacy groups argued for such relief at a time when many American households are cash strapped and out of work.
"We believe they've overpaid in their premiums," Jack Salzwedel, CEO of American Family Insurance, which is returning $2.3 million to customers, said earlier this week. "It's our duty to return that premium because it belongs to them."
American Family said it will send $50 per insured vehicle to customers and the typical customer household will get $100.
Farmers Insurance said customers will get 25% off their April auto premiums while Geico said auto and motorcycle customers will receive 15% between April 8 and October 7.
Anyone with a USAA auto policy as of March 31 will get a 20% discount for April and May, returning $520 million to policyholders. Progressive Insurance will give auto customers 20% off their April bill.
"If you have a balance on your policy, we'll apply the credit directly to your remaining balance," Progressive told its customers in a web post. "And if you're already paid in full, we'll return the money to the payment account we have on file."
Allstate, which is refunding $600 million, said customers will have 15% of their normal auto premium payments returned in April and May. The refunds also apply to Esurance and Encompass auto customers, two Allstate subsidiaries.
Auto insurers are doing more than just discounting premiums to help customers, said David Sampson from the American Property Casualty Insurance Association, the industry's trade group. Some companies have stopped canceling policies for non-payment while others have created pay-as-you-go programs, Sampson said in a statement this week.