Coronavirus: car insurers start to refund drivers and cut premiums

Insurance companies acknowledge that drivers pose a lower risk during lockdown

Car insurers are beginning to refund customers or offer them cheaper premiums because the coronavirus lockdown means fewer claims are being made.

This week the largest motor insurer, Admiral, announced it would give a £25 refund to car and van drivers because fewer people are using the roads.

The payment will be automatically given to all customers for each car and van they have with Admiral as of 20 April 2020. It insures just over four million vehicles.

Customers do not have to take any action to receive the refund, it will automatically be credited to them by the end of May.

What are other insurers doing?

Other top ten car insurers told Moneywise they are also considering refunding premiums or offering discounts to new ones.

A number of car insurance providers are already offering payment holidays and waiving fees for drivers affected by the coronavirus pandemic.

A spokesperson from Hasting Direct says the company has already cut prices and let drivers off paying fees during the coronavirus outbreak. 

But the spokesperson says Hastings will go further: "We do intend to pass further benefits back to customers and will communicate more on this as soon as we have firmed up our plans.”

Swiftcover told Moneywise:“We have a number of measures in place to help our customers during lockdown, including more flexible cancellation policies and support for financially vulnerable policyholders who may be struggling to pay their bills."

The insurer is prioritising helping NHS workers and volunteers by upgrading their car cover to allow them to transport patients, food and medicine.

LV= is cutting its customers' premiums if they are driving fewer miles than they expected to when they bought their policies.

An LV spokesperson says: "For those hit the hardest, we’re also not charging for admin or cancellations and waiving excesses on claims, as well as offering free enhancements to cover for customers who are NHS and key workers.”

Insurer MoreThan told us:"We are giving customers the option to update their policies to reflect their current usage and potentially lower their premium, however it is too early to say how the lockdown may affect claims, and the impact this has on premiums overall."

A spokesperson from Ageas says:"In anticipation of customers travelling less, we can confirm that we have already reduced our pricing to reflect the current situation.”

Could insurers go further?

Industry experts argue that insurers could go further and offer more support to drivers.

One top three car insurer already thinks it will save half the money it had reserved to pay 2020 personal injury claims, according to an industry insider, cash which could be returned to customers.

The average driver's daily mileage has fallen by 58% since lockdown, data from pay-per-mile insurer By Miles has revealed.

Despite this, most drivers are still paying the same price for cover.

James Blackham, founder and chief executive of By Miles says: “At a time when motorists are adhering to the lockdown and driving fewer miles than they’re paying for through their policy, traditional insurers are failing to adapt pricing structures and pass on cost savings to customers.

“Policyholders must be able to request a premium reduction or extra months added onto their policy - anything else isn’t treating customers fairly.”