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Allstate, American Family Insurance, Liberty Mutual to return millions in auto premiums as drivers hit the road less during coronavirus

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DISCLAIMER: As the COVID-19 public health situation evolves, new regulations are being continually issued. This page/story/information may not include the most recent information.

Brett MolinaUSA TODAY

Auto insurance companies Allstate, American Family Insurance and Liberty Mutual said they will give policyholders millions of dollars back because Americans are driving less during the coronavirus pandemic.

In a statement released Monday, Allstate announced it would return $600 million in premiums to customers. The company said most policyholders will get back 15% of their premium in April and May.

The credit will arrive either to their bank, credit card or Allstate account.

“This is fair because less driving means fewer accidents,” said Tom Wilson, Allstate chairman, president and CEO, in a statement.

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The company said it will also offer payment relief to eligible customers and will expand coverage for drivers who use their vehicles to make deliveries. Allstate also will offer free identity protection for the rest of the year to all U.S. residents.

Liberty Mutual and Safeco auto insurance customers will receive 15% refunds on two months of their premiums, Liberty Mutual said in a press release Tuesday, noting it will return $250 million to consumers. The company will also pause cancellations for not paying, and late fees.

“Today, more than ever, we recognize the uncertainty and financial challenges our customers are facing,” said Liberty Mutual Chairman and CEO David Long in a statement. “We remain dedicated to serving our customers during this unprecedented pandemic.”

Meanwhile, American Family Insurance said it will return about $200 million to its policyholders because “they’re driving less and experiencing fewer claims,” said chief operating officer Telisa Yancy in a statement.

The company said they will make a payment of $50 per vehicle covered by one of their policies. The average relief check will be $100, said American Family.

Other auto insurers may follow suit. In a statement obtained by USA TODAY, State Farm said it is expected to make a decision on premiums by the end of the week. “We are closely monitoring our automobile insurance loss trends and are considering how best to take this into account and return value to our auto insurance policyholders,” said State Farm.

Progressive said it is exploring “how to best return some premium to customers to reflect the decreased exposure that comes with less frequent driving during the pandemic.” The company said it expects to have plans in place soon.

In a statement, USAA said it is “exploring options to continue serving our members well during this difficult time.” The company says it allows members to stop non-payment cancellations, temporarily stopping fees for late and returned payments, and offering an easier process for setting up payment arrangements.

The coronavirus pandemic has left many Americans stuck at home and driving a lot less. The sharp drop in driving has led to a plunge in gas prices over the past month. As of Tuesday, the national average gas price is $1.92, according to AAA. One month ago, the average was $2.40 per gallon.

Follow Brett Molina on Twitter: @brettmolina23.

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Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

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