One significant impact for the Coronavirus quarantine was an immediate decrease in the number of cars on the road.
With less cars on the road, it means less wrecks and less liability for insurance companies.
But what about those premiums many of the customers had already paid?
Insurance companies like Allstate quickly began running commercials congratulating themselves on their decision to give rebates (in an amount of 15% based on their April and May premiums) to their policy holders.
They are being joined by other companies including State Farm (25%); Nationwide ($50 refund per policy); Geico (15% credit) and Farmers (25%) decisions.
While these decisions seem great at first glance, we should take a minute to understand the purpose and intent behind those decision.
Insurance companies are for profit companies.
Many of them, including Allstate, are stock insurance companies and not mutual insurance companies.
A stock insurance company is a corporation owned by its shareholders, and its objective is to make a profit for them.
Policyholders do not directly share in the profits or losses of the company.
In this situation, the bottom line is often times more important than the payment of claims.
This conflicts with the typical sales pitch that they will be there when their customers most need them.
This rebate seemed too good to be true—and it was.
According to the tracking group Arity, the total number of miles traveled is down more than 50% percent countrywide.
In an average month, insurance companies pay out about one billion in claims and with fewer drivers on the road and fewer collisions the claims are predicted to be down about 85%.
Could it be that the 15-20% rebates and credits are a PR move by the insurance companies and not about making things right for their own customers?
The next time you choose an insurance company, find out if they are mutual insurance companies or stock insurance company.
Don’t make your decision solely based on the cheapest premium.
At Keith Law Group we have the knowledge and resources needed to secure full and fair compensation for your accident related losses.
When you hire us, we will take swift action to investigate your accident and preserve critical evidence in your case.
Our lawyers will pursue an aggressive case strategy designed to win maximum compensation as quickly as possible.