Car insurance companies tout their refunds because of coronavirus, but they vary widely

Car insurance companies are touting their discounts because policyholders are driving less thanks to the coronavirus shutdown — but some discounts are better than others, consumer groups say.

State Farm, based in Bloomington, got an “A” ranking Monday by the Consumer Federation of America and Center for Economic Justice for announcing it will give refunds, on average of 25 percent covering March 20 through May 31.

Allstate, based in Northbrook, got a “B” grade for offering a 15 percent refund for April and May premiums. Along with American Family, Allstate was cited for being the first to offer a refund to consumers.

GEICO got only a “D-” because its pledge to discount auto and motorcycle premiums by 15 percent will kick in only when a vehicle owner renews a policy. So people who renewed in March will have to wait almost half a year to get any money, said Doug Heller, an insurance expert with CFA.

GEICO says its offered discount, which runs for an entire policy term, will help customers over a longer period, though.

Nonstandard insurers — which cover drivers who don’t qualify for normal car insurance — have largely been silent about coronavirus refunds, even though highway traffic has dropped dramatically nationwide, meaning insurers will be facing fewer car accident claims.

Birny Birnbaum, executive director of the Center for Economic Justice, estimated that insurers will save much more than any of them are giving as refunds, probably closer to 40%.

The consumer groups are calling on state insurance regulators to compile data on how much money was collected in premiums versus how much is being paid in claims to get a better handle on how big the refunds should be.

They also want other states to follow the lead of Pennsylvania, which has banned any increases in premiums based on lowered credit scores due to COVID-19. Credit scores “have now become unreliable and unfair” because so many Americans have been laid off or furloughed from their jobs, Birnbaum said.

Previously, only California, Massachusetts and Hawaii prohibited the use of credit history in setting premiums.

A Chicago Sun-Times investigation last year documented how a range of non-driving factors — such as renting rather than owning a home, working in a blue collar job, gender or residing on the edge of the “wrong” ZIP code — can result in widely varying premium quotes from the same insurance company.

Heller says consumers who used to have a long commute to work but are now working from home should call their insurers and ask to be re-rated for lower mileage, which could result in a better discount.