California orders auto insurers to refund premiums due to coronavirus - Roadshow:
One of the (admittedly minor) upsides to many people being asked to stay in their homes during the COVID-19 outbreak is that, on the whole, people are driving much less. This means that they're using less gasoline, emitting fewer pollutants and not getting into so many accidents. You'd think that last thing would translate into a drop in the cost of car insurance. You'd be wrong.
Except in California, of course. California Insurance Commissioner Ricardo Lara ordered on Monday that auto insurance companies return the premiums paid for coverage for the months of March and April because of the state's shelter-in-place requirements, and that order might extend to May.
"With Californians driving fewer miles and many businesses closed due to the COVID-19 emergency, consumers need relief from premiums that no longer reflect their present-day risk of accident or loss," Lara said in a statement. "Today's mandatory action will put money back in people's pockets when they need it most."
Many auto insurance companies have come under fire for their lack of action during the COVID-19 crisis, with critics accusing the companies of profiting from this pandemic. As a response, most of the major insurers, including Allstate, Geico and Nationwide, have begun to offer refunds of around 15% to customers. Still, the California order goes much further than that.
"I applaud efforts made by insurance companies to date that have offered grace periods and flexibility to consumers and businesses during this national emergency," Lara added. "We must do more to help our hard-working families and small businesses."
(Score: -1, Offtopic) by Anonymous Coward on Thursday April 16 2020, @05:59AM
I would tape myself to my human master's favorite kite, so I could soar!
Up in the bluest sky I would roar!
But for now, I'm just a bore.
(Score: -1, Offtopic) by Anonymous Coward on Thursday April 16 2020, @06:08AM
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(Score: 5, Insightful) by bzipitidoo on Thursday April 16 2020, @06:57AM (2 children)
In capitalist societies, there's a whole lot of secrecy demanded that serves little purpose other than to keep people ignorant of how much they're being ripped off. Like, job candidates and workers aren't supposed to know how much their fellows are paid.
Uber and Lyft take huge advantage of people routinely underestimating the cost of all that traveling. They're not the only ones. It's considered usual and normal for employees to shoulder the entire burden of the costs of commuting to work. A half hour commute for an 8 hour work day means the employee is putting in 9 hours of work to get 8 hours of pay. If employers had to pay for at least some of that, they just might get a whole lot more interested in telecommuting. But since they pay none of those costs, why should they care?
And, whatever happened to 9 to 5? Somehow that got changed into 8 to 5, with an unpaid, hour long lunch break. That's right, lunch breaks used to be shorter, but they were on the clock!
A great deal of the taking has been inflicted on the young because they don't know what the norms were.
(Score: 2, Insightful) by Anonymous Coward on Thursday April 16 2020, @05:29PM (1 child)
I'm surprised this got to +5 Insightful. There is some good ideological points here, but some dross, too.
Of course a company is not going to pay for commuting time. They are paying you for what you can do fer them, not for your existence. Turning this around a bit, imagine you hire a contractor to fix your roof. They quote you $5000. Then on the day of, they charge you $5100 because they got caught in a traffic jam on the way to your house for an hour. Would that be "fair?" I know I'd be upset.
In terms of paying for lunch, same idea. If you and your coworker arrive at 8:00, and then you take a 30 minute lunch and your coworker takes a 2 hour lunch, is it "fair" that you both leave at 5:00? If you are complaining that "we used to have a 7 hour work day, and then that go increased to an 8 hour work day via trickery," okay... but I think it is reasonable that time not spent working for the company (e.g. lunch) doesn't count as time spent working for the company.
(Keeping salaries hidden... I won't defend that. As I said, there are some good ideological points here, too.)
(Score: 3, Touché) by PartTimeZombie on Thursday April 16 2020, @11:48PM
Contractors routinely charge travel costs.
(Score: 3, Insightful) by istartedi on Thursday April 16 2020, @08:51AM (2 children)
On the one hand, I'd get more free money. On the other hand, I was pretty happy about the 15% discount I was already getting and moreover, going to a direct command economy like this sets a really, Really, REALLY bad precedent that we'll likely pay for as time goes by. I'm wondering if it might become as hard to get car insurance here as it is to get fire insurance. Another article I read said that accidents were down about 50%. You'd think it'd be more, but maybe the higher speeds with no traffic and/or people in essential jobs being stressed out has something to do with it.
So. I'm all for a discount, but let's make sure it's actuarially sound. If the insurance companies are seeing a 50% reduction in claims, then a 50% discount seems fair. I know my dramatically reduced driving is still not risk-free. I'm not interested in joining the party, comrades.
Appended to the end of comments you post. Max: 120 chars.
(Score: 0) by Anonymous Coward on Thursday April 16 2020, @01:39PM
How do you identify an industry that Has a lot of money on its hands:
1) they own a skyscraper downtown
2) they advertise a LOT
3) buffet invest big in them
Car insurance has all three across multiple companies
(Score: 3, Interesting) by edIII on Thursday April 16 2020, @06:28PM
This isn't actually that complicated, but it is definitely strange. Insurance policies can be cancelled under normal events, and depending upon reason and which side does it, there are usually refunds. This is a normal part of the insurance industry. Penalties for cancelling can be around 10% IIRC, and getting prorated returns is the normal I think. Insurance companies care more about policy retention to be honest, and they're hoping to keep customers.
What's strange about this, and nobody is asking the question, what happens to the state of insurance? Cancelled and refunded policies mean that a policy is no longer in force. People are staying at home, which does not mean they're not driving anymore. Insurance is still required. So what's happened? They can't be cancelling policies without creating a huge problem down the line.
My relatives received a letter from USAA and they apparently voluntary gave out "refunds", but they were very specific about it. It wasn't a cancelled policy, which is usually what a refund is tied to. Instead, it was a credit against the account. Insurance policies are still in place and active. My relatives didn't actually receive a check or anything. USAA was far more generous than 15%, they waived many months of premiums.
The state better be really careful here. An awful lot of policies and premiums are serviced by small insurance agencies, and not carriers. I can tell you that clawing back money from the agencies is going to be a mix of impossible and catastrophic. Money was already spent on payroll, information management platforms, etc. Carriers have the money to issue credits, but not checks back the policy holders. A full refund always implies that the company no longer has to provide services, and that's not an option here. Not even during COVID 2020.
They can only "refund" a part of the policy premium. Surely they can do more than 15%, but they can't do 100% without fucking everyone. What you want is for them to recalculate and reissue policies, which is actually a very interesting proposition, but has its own caveats. It's still a much better proposition than a refund.
Technically, lunchtime is at any moment. It's just a wave function.
(Score: 2) by Nuke on Thursday April 16 2020, @10:21AM (7 children)
Knowing insurance companies, I' surprised they don't try raising premiums. They would use some BS excuse like you might drop dead from C-V at the wheel and crash into something - if they thought they could get away with it.
They don't give me any discount for driving far fewer miles per year than the average car owner.
(Score: 1) by khallow on Thursday April 16 2020, @11:32AM (4 children)
Just because insurance companies want unicorns doesn't mean that they get unicorns. It's not California bureaucrats holding them back. It's the fact that you'll switch in a heartbeat, if you think an insurance company is going to try to raise your rates for such a silly excuse.
Why should you get such a discount? A lot of the risks of insurance aren't linear with miles driven - such as potential for lying about how many miles you drive in a year.
(Score: 2) by Nuke on Thursday April 16 2020, @12:35PM (3 children)
You can check the annual mileage of any car in the UK given its registration number (the publically visible plate) here [www.gov.uk] It does not have to be your own car, and you can even see what faults the car has, and has had in its past.
For a given car and driver, the best estimate of risk (in the absence of detailed data about its usage) is that it is linear with mileage.
(Score: 1) by khallow on Thursday April 16 2020, @12:54PM (2 children)
Last I checked, the UK wasn't California - which has an even worse problem with control freaks. Can you imagine what terrible policies California would implement, if they had access to that sort of data?
(Score: 3, Informative) by Nuke on Thursday April 16 2020, @04:44PM (1 child)
In the UK cars must have an annual roadworthiness check, "The MoT Test" : the TLA means the then "Ministry of Transport" which first implemented it around 60 years ago. Naturally, the indicated mileage at the annual test is recorded as part of the MoT paperwork, so the UK "State" has had access to it for a long time.
What is more recent is making this information open to the public. This is nothing to do with state control, in fact the state gains nothing from it - it is only revealing information it already has. The reason for revealing it (apart from the principle of "Open Government", which in practice cuts both ways), is to allow potential buyers of used cars to check whether the car has had serious past problems and that it has not been clocked. Clocking, ie hacking the odometer to lower the indicated mileage, has been a common problem in the past. Shady used car dealers could still clock cars today (but I understand it is now very difficult) but at least they cannot reduce the mileage below that recorded at the previous MoT test.
(Score: 2) by PartTimeZombie on Thursday April 16 2020, @11:57PM
As any red-blooded American libertarian knows, anything those pinko Limeys do must be wrong and bad.
The same goes for the Socialists in California.
(Score: 1, Interesting) by Anonymous Coward on Thursday April 16 2020, @01:42PM (1 child)
> They don't give me any discount for driving far fewer miles per year than the average car owner.
What state are you in (if you are in USA)? Here in NY my car is classed as "pleasure" because I work from home and this gives me a significant discount.
(Score: 2) by Nuke on Thursday April 16 2020, @04:18PM
I'm in the UK.
(Score: 2) by DeVilla on Saturday April 18 2020, @06:59AM
I'd like getting my money back. Especially since the state requires me to buy insurance and requires I not go any where. But if we force the insurance companies to completely refund money for an emergency like the current one (are people really not driving at all) then can they increase premiums during an emergency that involves a lot of government ordered driving, like mass evacuations for a hurricane?