A new lawsuit says your auto insurer owes you a COVID 'stimulus check'

Ethan Rotberg
·5 min read
A new lawsuit says your auto insurer owes you a COVID 'stimulus check'
A new lawsuit says your auto insurer owes you a COVID 'stimulus check'

Now that the legislation for President Joe Biden's $1,400 stimulus checks is headed for a full vote in the House Representatives, consumer advocates are putting renewed ressure on auto insurance companies to provide some more stimulus cash of their own.

In a set of class actions lawsuit filed in Nevada on Feb. 23, plaintiffs claim that 10 leading auto insurers have kept premiums unreasoanbly hire during the pandemic, a period when restrictions on business activity and other parts of normal daily life have caused overall driving to drop well below pre-pandemic levels, according to Bureau of Transportation Statistics.

And that’s led to staggering increases in profits for auto insurers, according to research by consumer advocates. Progressive reported an 82% increase in net income, while Geico’s pre-tax earnings tripled during the second and third quarters of 2020, just to name a couple.

Many insurers have already given customers some discounts on premiums, ranging from small one-time refunds of between to15%-25% reductions on some 2020 monthly bills, according to information contained in the the Nevada lawsuits.

“I believe that the rates should have been cut something in the order of 50-60%," said Robert Eglet, lead counsel for the law firm that filed the lawsuits, in an interview with the Associated Press

Many Americans, not just those in Nevada, may indeed be wondering: Why am I paying full price for insurance when my car sits in the driveway and my insurance company is reaping the benefits?

Here’s how you can try to get more relief from your insurer, plus a few other strategies to slash that bill when money is tight.

Auto insurers thrive during the pandemic

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Back in December 2020, the Consumer Federation of America and the Center for Economic Justice sent a public letter to state insurance commissioners, saying auto insurers should be required to deliver a new round of refunds to policyholders.

An analysis by the two groups showed crashes down 31% since the beginning of the pandemic compared to the year prior.

The Nevada lawsuits — which name as defendants State Farm, USAA, Geico, Acuity, Liberty Mutual, Farmers, Progressive, Travelers, Nationwide and Allstate — contend that the trend has continued into 2021.

So can I get free money from my insurance company?

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An analysis by the U.S. Public Interest Research Group Education Fund took a state-by-state look at how insurance companies repaid parked motorists last spring.

“Regardless how much each company profited, the majority of insurers didn’t give back more than half of one month’s premium,” the consumer watchdog says.

But some companies didn’t issue refunds or cut rates unless customers called and asked.

That means you could get free cash just by contacting your insurance agent. With pressure mounting, your insurer might be open to reviewing your premium, assuming you’re still driving less than ever. Make note of how your habits have changed, such as the distance you’re not driving while you work from home.

Other ways to shrink your premiums, starting today

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If your insurance company won’t give you a pandemic discount, there are still a number of ways to cut down on your insurance bill.

Drop optional coverage

Some auto insurance policies include extras that you may be able to do without for a while. For example, can you cut out the option that pays for a rental car while yours is at the repair shop?

Removing these extras can save you a few bucks, just make sure you’re still meeting your state’s minimum liability coverage and are still protected in case of an accident during those few trips to the grocery store.

Switching insurance providers

If your insurer won’t give you a break, maybe you can find a new one that will.

Even if you can’t switch to a company with pandemic discounts, shopping around for the best rate can still help you lower your bill.

If you haven’t comparison-shopped over the last six months, you could be wasting more than $1,000 per year. With a free quote-comparing service, you could find the best price in minutes.

Raise your deductible

If the risks of a claim are lower, you may consider raising your deductible — that’s the amount you pay out of pocket on a claim before your insurer takes care of the rest.

A higher deductible will save you money on monthly premiums, but it could lead to more costs if you do end up in an accident.

Suspend your car insurance

In some cases it may be possible to put your insurance on hold if you’ve completely stopped driving during the pandemic.

This path could be tricky — it could result in fines or a suspended registration from the DMV, and it may not be possible at all if you’re making car payments to the bank.

You’ll also need to store your vehicle in a safe and secure spot, because you won’t have coverage from non-driving related losses, like theft.

What if I need even more savings?

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If saving on car nsurance isn’t enough, here are a few more ways to give your bank account a boost until the economy bounces back:

  • Slash your other insurance bills. By doing some simple comparison-shopping using online tools, you can save hundreds on your homeowners insurance and life insurance.

  • Develop a side hustle. You can turn your hobby into a lucrative side gig using the world’s largest online marketplace for digital services. Just create a profile describing your in-demand skills, and see who comes calling.

  • Invest your spare change. With a mobile investing app you can automatically accumulate “change” every time you use your debit card and let the app invest the money for you in a diversified portfolio of stocks, bonds and other reliable investments. You won't even notice the deposits, but you will notice the returns.