Following the announcements that Allstate and Geico will dole out 15% discount credits to its auto insurance customers, Farmers insurance and 21st Century insurance said they would take 25% off customer premiums for the month of April. Progressive insurance also announced it will discount April and May premiums by 20%. The credits will be applied automatically without any required action from customers.
As a result of the strict stay-at-home orders that are in place to help stop the spread of the coronavirus, much of the public is spending significantly less time on the roads. With fewer cars driving, there are fewer accidents. If people aren't driving, they're essentially paying for a service they are not using, or are using drastically less often.
According to AAA, a U.S. Energy Information Administration report stated demand for gasoline is nearly at a 30-year low. The amount of weekly U.S. product supplied of finished motor gasoline dropped from 9,449 barrels per day in the first week of March to 6,659 barrels per day in the last week of March. Furthermore, Allstate data indicated driving has been down 35-50% in most states.
To make matters worse, the COVID-19 pandemic has caused tremendous financial turmoil for millions around the world. According to NPR, roughly 17 million people in the U.S. have filed for unemployment in the past three weeks, as a result of company closures, employee layoffs, and furloughs.
The insurance companies are recognizing this and attempting to make good by their customers through slight discounts. For Progressive customers who have a policy as of April 30, 2020, they will be credited 20% in May, and those who have a policy as of May 31, 2020, will be credited 20% in June. Farmers and 21st Century will get a 25% discount, but for now, it's only for the month of April.
“We understand how difficult and uncertain people’s lives are right now," Progressive President and CEO Tricia Griffith said in a statement. "While auto insurance might not be the most pressing topic on everyone’s mind, we know that finances could be. For our customers who have trusted us to be there in their times of need, we’re fulfilling that promise. We want them to know how much we care. Always guided by our core values, doing the right thing is vitally important to us. We know that by sticking together and taking care of one another during these difficult times, we’ll come through this stronger. We want our current customers to remain our future customers.”
Additionally, Farmers and 21st have halted any policy cancellations for non-payment until May 1, while Progressive has halted cancellations for non-payment until May 15.
We expect State Farm to be the next major auto insurance provider to make an announcement about its plans during the pandemic. A State Farm agent told Autoblog a statement is coming tomorrow, April 10.