Car insurance firms must offer refunds based on individual premiums to ensure the most vulnerable are not affected by overpayments, according to experts at ByMiles. Many firms have come under fire for not offering refunds or discounts despite traffic levels dramatically falling.
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Car insurance refund: How to get a refund during lockdown
Admiral is the only car insurance firm in the UK to offer motorists any financial refunds on their policies with each customer receiving £25.
The £110million refund scheme is said to be a third of the company’s total 2019 profits or the equivalent of a whole months’ premium income.
However, ByMiles says some Admiral customers have complained the offer is not a “fair reflection” of the costs they need to pay.
The insurance experts revealed how younger drivers could be up to £140 out of pocket by the end of the lockdown.
This is because younger drivers now pay up to £2,000 per year on car insurance and will face the highest overpayment during lockdown.
ByMiles have previously claimed insurance firms could be set to make £1billion during the lockdown .
This is down to fewer claims being made by motorists during this period due to a decline in the number of journeys made.
Motorists are therefore paying for insurance on a vehicle they are barely using while companies payouts dramatically fall.
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James Blackham, ByMiles CEO said: “If you’re driving less, you should pay less. No one on the roads means reduced risk and far fewer payouts.
“So, while we applaud Admiral for being the first to issue partial refunds to all customers, we’d like to see all insurers pass on some of the £1 billion in profits we forecast they’ll make during the lockdown.
“The next wave of insurers to offer refunds must go further and refund based on an individual’s overall premiums.
“We’re already seeing customers complaining that Admiral’s blanket £25 isn’t a fair reflection of their costs.
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“Unsurprising as over a two month lockdown, drivers could be between £35 to £58 out of pocket, for each car they own, with this overpayment rocketing up to over £140 for younger drivers.”
Many car insurance firms have offered some motorists payment holidays or helped to spread payments for those in financial difficulty.
Most are also offering to extend cover for those on the coronavirus frontline meaning motorists can drive to and from work without any risk of invalidating cover.
However, many car insurance firms only offered this support once the Association of British Insurers (ABI) and the Financial Conduct Authority (FCA) issued statements.
These bodies are followed by many car insurance firms and requested companies did not take advantage of motorists during the lockdown.
ByMiles CEO, James Blackham says the crisis has revealed insurance is “unfair” as they urged insurers to modify agreements to help those not using their vehicles.
He said: “This crisis has shown UK drivers that the way car insurance works is unfair.
“We urge insurers to be proactive, pass on savings before they’re forced to, and consider modifying policies to reflect the new normal.
“Drivers will remember how car insurers behaved during the pandemic. It’s time to treat customers fairly.”
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