Auto Insurance Companies Are Making a Killing On the Pandemic

During the months of the shelter-in-place orders, traffic on the roads and highways throughout California was significantly reduced. Even now, after the order has been lifted, the number of cars on the road is nowhere near the amount present before March 2020. Because many businesses remain closed, large gatherings are still discouraged, and many people continue to work remotely, it may be a while before traffic volume returns to normal. With this reduction in traffic comes far fewer auto accidents, which translates into fewer automobile insurance claims being paid by insurance companies.  

According to a report by CBS News, more than 20 U.S. states reported a sizeable reduction in fatal car accidents during the coronavirus pandemic. California's fatal car crash rates dropped by a staggering 84%. Captain Salvadore Suarez of the California Highway Patrol reported that the state's overall traffic volume was reduced by 35%. 

This all adds to automobile insurance companies pocketing many policyholder premiums. To mitigate the negative optics, the insurance companies announced they would be offering credits towards future premiums to make up for the reduction in driving. However, the math results in a favorable outcome for the insurance companies' wallets.

You may think the insurance companies acted in good faith by offering two months of premium credits and reductions. Still, when you take a moment to do the math, the reductions in premiums do not match the reduction in driving. Most companies offered only a 15% premium reduction. If one family vehicle was not driven for two months, which was a prevalent scenario, that should translate into a 100% refund of two months of premiums for that vehicle. Even if the pandemic did not result in the complete disuse of a vehicle, personal driving was often reduced by much more than 15% - usually limited to a few trips to the grocery store and back.  

With this unequal math, insurance companies are reaping significant financial rewards. They collected the bulk of customers' premiums and continue to pay far fewer claims. It will likely be a while before auto accident statistics return to pre-pandemic numbers. You would think that that insurance company would be happy with that arithmetic, but their greed is boundless. If the number of times we see Progressive Flo, Geico's gecko, and Liberty Mutual's emu on our televisions is any indication, they have always enjoyed outrageous profits. Still, the insurance companies have been employing another more insidious strategy to make even more money - making lowball offers on injury claims.   

There is no harm in calling your insurance company's customer service line and requesting a more significant premium credit/reduction. If your car sat in the driveway throughout March, April, and May, your discount should be more significant than 15%. This may be a case of those who ask and receive.  

Plenty of cars are out on the roads, and many of them are driven by careless people. If a negligent driver causes you or a loved one injuries, we can help hold that driver accountable for your medical expenses, lost income, and pain. Contact my law firm at (916) 921-6400 or (800) 404-5400. We offer free and friendly advice with no obligation. 

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