State orders new car insurance ‘stimulus checks’ — are you due another refund?
Some insurers paid discounts and rebates to policyholders when they reaped soaring profits as Americans stayed home more during the Great Driving Slowdown in 2020. Yet government officials, advocacy groups and a class-action lawsuit argue it wasn’t nearly enough.
If you’re paying full price, here’s how you might get another discount from your insurer — plus some other strategies to slash your monthly bill.
This state is ‘out of patience’ with Car insurers
The companies have a month to explain their plans, under the order by Insurance Commissioner Ricardo Lara.
“On behalf of consumers, I am out of patience,” Lara says in a statement. “These Insurance companies have 30 days to tell us once and for all how they are going to make it right before we take further action.”
The insurers targeted by the order had the largest gaps between the amount they refunded drivers and the amount they should have paid back, the Insurance Department says.
A state analysis found that insurers returned an average of 9% of Auto premiums from March to September 2020, but the Insurance Department estimates they should have refunded nearly double that amount — 17% — over the seven-month period.
Car insurers under siege for more rebates
During the worst of the pandemic, driving dropped well below pre-COVID levels, meaning fewer accidents and big profits for Auto insurers.
Progressive reported an 82% increase in net income, while Geico’s pretax earnings tripled during the second and third quarters of 2020.
Beyond California’s order for more refunds, Washington and New Mexico are taking initial steps, and Massachusetts Attorney General Maura Healey has sent several pointed letters to the state’s Insurance regulator.
The conflict ended up in the courts with multiple class-action lawsuits filed this year in Nevada and Illinois.
So can I get free money from my Insurance company?
Unless more regulators step in or the class-action suits succeed, insurers won’t be forced by law to hand out more money than they already have.
Most rebates provided last year were minimal; it was rare to get back more than half a month’s premium. On average, advocacy groups say, insurers shortchanged policyholders $125 per vehicle.
But some companies didn’t issue refunds or cut rates at all unless customers called and asked.
If you haven’t contacted your insurer yet, you might have free cash waiting for you. And with pressure mounting, your provider might be open to reviewing your premium, especially if you’re still driving less than ever.
Drop optional coverage
Removing these extras can save you a few bucks. Just make sure you’re still meeting your state’s minimum liability coverage and are protected in case of an accident during those trips to the grocery store.
Switch Insurance providers
If your insurer won’t give you a break, maybe you can find a new one that will. If you haven’t done any comparison shopping over the last six months, you could be overpaying by more than $1,000 per year.
With a free quote-comparing service, you could find the best price in minutes.
What if I need even more savings?
Cut the cost of your debt. If you’ve relied on Credit cards throughout the pandemic, expensive interest is bound to catch up with you. A lower-interest debt consolidation loan can fold your balances into a single, lower-interest payment — and help you find freedom from your debt sooner.
Invest your spare change. Using a popular investing app, you can automatically invest the “change” left over from everyday purchases. The money goes in a diversified portfolio of stocks, bonds and other reliable investments. You won’t even notice the deposits as you build or round out your investing plan.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.