Consumer Advocates Calls Allstate’s 15% Premium Cut “A Good First Step”

Responding to calls from Consumer Federation of California Education Foundation and other consumer groups, insurer Allstate took what the Consumer Federation called, “an important first step” in announcing a 15% reduction in monthly automobile insurance premiums for the months of April and May.

On March 24, the CFC Education Foundation called on insurance companies in California to reduce premiums for motorists who are idled under Coronavirus Stay at Home Orders.

When drivers reduce their mileage, they may be entitled to premium reductions under California regulation. When roads are empty, drivers have fewer accidents, which should produce additional rate cuts that create savings for all motorists.

Allstate’s 15% across the board rate cut is a valuable first step, but it is inadequate for many of its customers who are suddenly unemployed or working from home.

According to 2018 research by Consumer Federation of America (see appendix), Allstate gives a California driver who reduces annual mileage from 12,500 to 7,500 a 27% rate cut.   

Two weeks ago, CFC Education Foundation filed a petition with the California Department of Insurance calling on the Insurance Commissioner to order all insurers to immediately inform their customers of the right to get a rate cut if their mileage is reduced due to skyrocketing unemployment or Stay at Home Orders.

Allstate is California’s fourth largest auto insurer, earning more than $2.6 billion in the state in 2018. Two smaller insurance carriers also announced COVID-19 rate cuts.

American Family Insurance announced a $200 million nationwide rate cut for personal auto insurance policyholders, and Next Insurance, a commercial automobile insurance carrier, announced a temporary 25% rate cut.

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