Do drivers deserve auto insurance discounts?

Drivers should get even bigger car insurance discounts, consumer advocates argue, citing the drop in miles driven and accident claims during the coronavirus pandemic.

While auto insurers are giving customers average premium refunds of about 15% these drivers are owed much more — twice as much — advocates argue.

A 30% discount would reflect a roughly 50% decline in miles driven and accident claims during the crisis while tempered by some higher insurer costs, such as a likely rise in unpaid policies, says Birny Birnbaum, an economist and executive director of Center for Economic Justice, which analyzed pandemic driving and claims in a May study. Given the change in driving patterns, auto insurers’ rates “became excessive overnight,” Birnbaum adds.

The pandemic has upended daily patterns for the nation’s more than 220 million licensed drivers. For many, the typical commute of 55 minutes behind the wheel has disappeared as they work from home. That’s prompted some consumers to hope for a price break from their insurers. Given that the typical consumer pays about $1,400 annually to insure their car, it’s not an insignificant financial issue.

One of those drivers is John Johnston, a computational specialist from Perry, Michigan, who is largely working at home during the pandemic. He’s no longer making a 30-mile daily commute to his office or taking frequent family trips to Canada or driving to restaurants and theaters with his wife. “I’m barely driving,” he says.

When his auto insurer emailed him to say he’d receive a refund for April and May, he said he was expecting about $100 off his annual bill of about $1,800. Instead, he was given a refund of $35.11 — or less than 10% of the cost of insurance over two months.

“I expected it to be underwhelming, but not that underwhelming,” he says.

Other drivers say they are confused by the refunds offered by their insurers. Shauna Dillenbeck of Boise, Idaho, says her insurer, State Farm, told her it had earmarked billions in refunds for customers — but she has yet to see a reduction in her monthly $160 insurance bill.