Consumer Federation: We're driving far less, insurance refunds should be much bigger

DETROIT — Interstates and city streets are empty and cars are quarantined in their owners' garages, so consumer advocates argue that it only makes sense for auto insurance rates to reflect that.

In the states of Washington and New York, the number of traffic crashes reported to state police fell about 30% in March compared with a year ago, as the states were on lockdown for part of the month to stop the spread of coronavirus.

Other states are reporting similar declines in traffic and crashes, and consumer advocates are calling on insurance companies to cut premiums or give refunds by a like amount.

Some companies have responded, but the Consumer Federation of America reports that discounts may be too small and aren’t being applied evenly.

Many insurance premiums are based on driving 1,000 miles per month, but customers may be driving only one-tenth of that, the federation said.

“The risk exposure is not nearly the same now as when the policy was first priced,” Doug Heller, an insurance expert with the federation, said Monday.

Companies that sell 82% of the auto policies in the U.S. have announced refunds or credits to drivers worth more than $6.5 billion during the next two months, the federation said.

Some, like State Farm, the country’s largest auto insurer, are giving credits starting in June that amount to a 25% reduction in bills from March 20 through May 31. That’s about $20 per month per vehicle, the company says.

That’s the kind of immediate relief that all companies should offer because so many people have lost their jobs due to stay-at-home orders from state governments, according to the federation. Yet many are offering only 15% discounts and one, Geico, won’t get the money to customers until their policies are renewed.