Local residents are beginning to feel the impact of auto insurers disbursing dividends to customers who are driving less under the current COVID-related travel restrictions.
According to Los Altos independent agent Gil Koury, insurance companies followed State Farm Insurance’s lead in returning money to customers, many of whom lost jobs or were furloughed in the wake of shelter-in-place orders.
State Farm unveiled its State Farm Good Neighbor Relief Fund April 9 – a $2 billion dividend return to auto insurance policyholders. State Farm also partnered with Global Citizen and the World Health Organization to sponsor “Lady Gaga’s One World: Together At Home” special broadcast April 18. The concert raised more than $127 million.
Los Altos resident and longtime agent Jim Flynn explained State Farm’s rationale.
“State Farm wasn’t worried about giving the money back first,” Flynn said in a phone interview with the Town Crier. “We were worried about customers who didn’t pay. We didn’t want to jam someone up and cancel on them (unknowingly).”
What was once a reminder about a past-due premium, Flynn said, is now a personal check-in with people who, in the worst-case scenario, may be calling about health insurance for a family member with medical bills from fighting COVID-19 or life insurance for a relative.
“Fear is not what we need here,” he said. “Even if you have a different insurance company, maybe we can get you to (talk to) someone at that company. There’s usually always something we can do.”
Most insurance providers are electing to give clients similar options, including offering credits between 15% and 25% on premiums for the months of April and May.
State Farm is offering a 25% refund to most policyholders, Farmers Insurance is reducing April’s premium by 25%, and Allstate Insurance, Mercury Insurance and Traveler’s Insurance are refunding 15% for April and May. Safeco Insurance will return approximately $250 million to its customers, refunding 15% on premiums for two months.
Nearly every insurance agency is suspending cancellation or nonrenewal of coverage due to nonpayment during the pandemic, which Koury, a lifetime local resident, called “the human approach.”
“We realize some people literally aren’t getting paid, and it would be terrible for us to cancel (their policies) and put them in financial hardship,” he said.
For more information on refunds, call the individual auto insurer or visit the company’s webpage.