California Insurance Commissioner announces Premium Refund due to COVID-19

Earlier this month, California Insurance Commissioner Ricardo Lara ordered insurance companies to return premiums to customers because of the COVID-19 crisis. Because of shelter-in-place orders and business closures, driving and other business activities are down significantly across the state.

What does the premium refund order in California say?

The California Insurance Commissioner’s order to return premiums directs insurance companies to “make an initial premium refund” to all impacted policyholders for the months of March and April. Insurance companies have until August 11th to provide the refunds (120 days after the order was issued on April 13th). Crucially, the insurers have flexibility in how to return premiums and how much premium to refund. Premiums can be returned through a credit applied to customer accounts, a reduction in premiums owed, a direct return of premium, or any other “appropriate premium adjustment.”

In addition to private passenger automobile insurance, the following lines of insurance are subject to this order:

• Commercial auto
• Worker’s comp
• Commercial liability
• Commercial multiple peril
• Medical malpractice
• Any other line where measures of risks are now lower as a result of the crisis

Premiums from May will also be subject to refunds if shelter in place orders continue during that month. If the crisis continues beyond May, the insurance commissioner will issue new instructions to insurance companies.

For drivers, what does all this mean? Drivers will certainly receive some relief in the amount they are paying for car insurance, whether it’s through a refund, reduction in rate, or credit to their account. But that won’t necessarily be a full refund for the entire month of March and April.

How have insurers responded?

So far, we have seen a range of responses from insurance carriers:

• Allstate has refunded 15% of monthly premiums paid in April and May back to their customers.
• American Family will be issuing a one-time check of $50 per vehicle insured.
• National General will be applying a credit to customer accounts worth 15% of April premiums.
• Aspire General will automatically provide a credit worth 10% of premiums earned from March 20th to April 30th, no later than August 11th.

To figure out exactly when and how you can expect a premium refund, reach out to your insurance carrier.

Sigo can help

Sigo is here to help. If you have a policy with Sigo, please contact us to identify your insurance carrier and learn more about how you will receive California’s premium refund. If you are looking to learn more about what affects your premium price, check out our blog or FAQ. Finally, if you are looking to get auto insurance from the safety of your home, head to our online quote tool!