U.S. auto insurers face backlash for 'inadequate' COVID-19 refunds

When stay-at-home orders caused dramatic drops in driving early on in the pandemic, many of the largest U.S. personal auto insurers responded by issuing rebates and refunds to policyholders.

Now, consumers are saying that was not enough.

New lawsuits filed in Illinois against Allstate, Geico, Progressive, Travelers and others allege the insurers offered “woefully inadequate” COVID-19 auto insurance discounts and unfairly profited from high rates.

The complaint explains that the relief offered during the pandemic did not go far enough when accounting for the drop in claims insurers experienced during the same period. Statistics indicate that miles driven by motorists dropped by nearly two-thirds in March and April in some states.

Policyholders argue that the 15% offered by some companies, including Allstate and Geico, did not provide the relief that any fair and reasonable actuarial analysis would require.

Attorneys representing the policyholders are attempting to get the suit classified as a class-action and predict that thousands of policyholders could join the case before the end of 2020.

Editor’s Note: Across the country, individuals and businesses seek restitution for the income they lost during the pandemic. Expect to see more cases across a vast array of industries in the coming months.

Related: 

• Fitch: First-half 2020 saw record drop in auto claims
• Alcohol, Meat Loaf and auto insurance comparison shopping
• Independent agents’ auto insurance volume down 24% in Q1 2020