By Kathleen Pender, SAN FRANCISCO CHRONICLE
April 7, 2020
If you’re driving less because of the coronavirus – and who isn’t – you might be able to get a break on your auto insurance premiums, automatically in some cases or else by asking.
Some of the nation’s largest auto insurers are offering across-the-board cuts nationwide. GEICO said Mondayit’s providing a 15% credit to auto and motorcycle policies that come up for renewal between April 8 and Oct. 7. The credit will also apply to new policies purchased during this period.
GEICO said the credit will save the average customer with a $1,000 semi-annual premium $150.
Also on Tuesday, Liberty Mutual Insurance said it would give customers with Liberty and Safeco personal auto insurance policies nationwide a 15% refund on two months of their annual premium, pending regulatory approval. That follows Monday’s announcement from Allstate, which said it is working with state regulators to give most auto policy customers nationwide a “shelter-in-place payback” equal to 15% of their April and May premiums.
Among smaller companies, American Family Insurance said it will give customers a one-time refund of $50 for each car it covers. Next Insurance, which caters to small businesses, is reducing its April general liability and commercial auto premiums by 25%.
In California, your safety record, miles driven and years of driving experience, in that order, must be the top three factors that go into your auto premium. Because of this, drivers in California get the biggest savings when they drive less, according to a survey published in 2018 by the Consumer Federation of America.
On March 24, the Consumer Federation of California Education Foundation filed a petition asking state Insurance Commissioner Ricardo Lara to require insurers to immediately let customers know they could be entitled to a rate cut if their mileage is reduced because of unemployment or stay-at-home orders. Longer term, it asked Lara to begin a rule-making proceeding that “could empower the commissioner to order rate cuts in this or similar emergencies that reduce driving on a widespread basis,” said Richard Holober, the federation’s president.
The 2018 study compared premiums in 12 cities nationwide and found that only in Los Angeles did drivers see “consistent savings for lower mileage driving.” In Los Angeles, premiums dropped by an average of 8.7% for every reduction of 5,000 miles per year. Very low-mileage drivers 2,500 per year paid an average of 30% less than very high-mileage drivers 22,500 per year.
Outside of California, drivers saved only 1.6% on average for every 5,000-mile reduction, and very low mileage drivers paid only 6% a year less than the road warriors.
Allstate’s proposed 15% rate reduction “is still on the low end of what’s due, but in the midst of a crisis, it’s a good start,” said Douglas Heller, the California federation’s insurance expert.
The California Department of Insurance said it is reviewing Allstate’s rate filing for a 15% premium discount to determine whether it needs the department’s approval. In a statement, Lara called it “a step in the right direction.”
Identifying myself only as a customer, I called my own insurance company this week to ask about a rate reduction, since my spouse and I are now working from home. It agreed to reduce our premium starting the next day until our policy renews in August. The refund we are getting represents 27% of our six-month premium, but had it started in February, it would have amounted to 34% of the six-month premium.
Scott Dauenhauer of Murrieta in Riverside County said he contacted his insurance company, Kemper, on Friday and got a rate reduction equal to 11% of his annual premium “just by calling and reducing the expected miles traveled.”
Judy Hiramoto of San Francisco said she contacted her State Farm insurance agent on March 26 and again on Monday to ask for a rate break because she’s now driving no more than 8 miles a week.
“He refused to do so, stating that my rate will be readjusted in August 2020 when the policy is reviewed for the next term,” she said in an email.
At State Farm, “we are closely monitoring our automobile insurance loss trends and are considering how best to take this into account and return value to our auto insurance policyholders. We expect a decision in this regard by the end of the week,” State Farm spokeswoman Gina Morss-Fischer said in an email.
Although Proposition 103 requires that safety record, mileage and driving experience have the greatest influence on auto premiums in California, insurers may consider a host of lesser factors that could impact what, if any, discount they might get. These include the customer’s marital status, vehicle age and type, coverages chosen, deductibles, and multi-line, good student and loyalty discounts, according to the Insurance Information Institute, a trade group.
Janet Ruiz, a spokeswoman for the institute, said customers should call their insurance company and inquire about a discount.
Rex Frazier, president of the Personal Insurance Federation of California, a trade group, said that in California, auto customers could not get a discount just because they’re driving fewer miles.
“An insurer in California would not be permitted to provide a rate cut without submitting a filing with the Department of Insurance,” he said. However, “we are also checking with the department to see if there is an easier, allowed path,” he said.
Any time policyholders advise their company about a change to their risk profile, the company must consider whether a premium adjustment is warranted, insurance department spokesman Michael Soller said in an email. “Depending upon the nature of a particular insurer’s rating plan, a company could revise the premium without a rate filing.” He urged consumers to contact the Department’s hotline 800-927-4357 in the event an insurer is not responsive.
In a statement, Lara said, “Consumers and businesses need rate relief now and we need insurers to move with all possible speed to reassess their risk profiles in light of California’s proactive shelter in place efforts.” He added, “The Department of Insurance has already been looking at this issue and sees the issue as broader than just private passenger automobile insurance mileage, and we will have an announcement in the near future.”
” We strongly encourage consumers to contact the Department s hotline in the event an insurer is not responsive. Michael Soller, California Department of Insurance spokesman”