Premium refunds: when regulators order money back to drivers

The 2020 auto insurance refunds happened because driving collapsed in the spring and a premium is built on an assumption about how much a car will be driven. Insurers announced credits on their own, and regulators in some states, including California, New Jersey and Michigan, then required them to give back part of the premium. Whether a regulator can force a refund again depends on that state's law, and a California appeals court ruled in 2025 that one common reading of Proposition 103 does not give drivers a right to repayment of approved rates.

Pandemic refunds were a one-off, but premium refunds are not. Regulators order money back after rating errors, missed discounts and, in Florida, excess profits. This article walks through what happened in 2020, the legal hooks that made orders possible, the limits courts have drawn, and how to find out whether you are owed anything.

What happened in spring 2020

Insurers moved first. In an April 13, 2020 report, trade publication Insurance Journal said the group of insurers offering discounts "now includes all major auto insurers," citing the Insurance Information Institute's tally of $8.1 billion in refunds, discounts, dividends and credits and a projection of $10.5 billion. The institute, now called Triple-I, raised its estimate to more than $14 billion in a June 4, 2020 update and noted that in most cases customers did not need to do anything to receive a credit. Those figures come from an insurance industry research group, so treat them as the industry's estimate, not an audited total.

Regulators entered in different ways:

• California issued a bulletin on April 13, 2020. According to Insurance Journal's report, it covered premiums for at least March and April (and May if shelter-in-place rules continued) in six named lines, including private passenger auto, and required a credit, reduction, return of premium or other adjustment as soon as possible and no later than August. Insurers did not need prior approval if they used methods in the bulletin, such as an average percentage based on estimated change in risk, and customers could give their own actual or estimated experience. Insurers had to report refunds to the department within 60 days.
• New Jersey issued Bulletin 20-22 on May 12, 2020. It ordered refunds or other adjustments for private passenger auto and other lines "as quickly as practicable" and no later than June 15, 2020, and required insurers to notify each affected policyholder of the amount by that date.
• Michigan issued Order No. 2020-10-M, reported by Insurance Journal on June 2, 2020. It set a June 10, 2020 deadline for insurers to file the refund or waiver amount, how it was determined and how customers would be paid, plus a plan for telling customers about it. The order did not fix a percentage.
• Florida took a softer path. The Office of Insurance Regulation's 2020 year-end summary describes informational memoranda urging flexibility on premium payments and says the office worked with insurers on more than 110 COVID-19 relief filings, about half related to personal and commercial auto.

I reviewed only these four. Other states used their own mix of bulletins, requests and filings, and some left the matter to insurers. Your state department's bulletin archive for 2020 shows what it did.

The three tools regulators used

The difference between a "bulletin," an "order" and a "memorandum" matters because it changes what a driver could count on.

A bulletin with a deadline and a notice requirement, like New Jersey's, gave drivers the strongest guarantee because every affected policyholder had to be told the amount. A voluntary program could end whenever the company chose.

The legal hook: premiums built on exposure

Regulators acted because a premium is a forecast. A rate filing assumes drivers will, on average, travel certain miles and have certain claims. When commuting stopped, the forecast was wrong, and rate laws that bar charging more than the risk justifies gave regulators a basis to step in.

New Jersey's bulletin is explicit. It says the pandemic made the projected loss exposures of many policies overstated or misclassified, notes that premiums are based partly on measures such as miles driven, and cites the rule that rates shall not be excessive, inadequate or unfairly discriminatory. It also gave insurers two ways to comply: reclassify exposures (for example, changing a car's use from commuting to pleasure) or reduce the exposure base, such as miles driven. The same bulletin let insurers refund without prior approval if they applied a uniform reduction across a line, and required them to file the refund program through the SERFF rate-filing system within 15 days of starting it. An insurer that believed its rates were not excessive could submit its reasons and documents by June 1, 2020.

California's authority comes from Proposition 103. The California Insurance Code section 1861.05 says no rate shall be approved or remain in effect that is excessive, inadequate or unfairly discriminatory. It also sets the review clock: an application is deemed approved 60 days after public notice unless a hearing is requested or required, a hearing is required on request for personal lines increases above 7%, and an application is deemed approved 180 days after receipt unless it was disapproved after a hearing or extraordinary circumstances exist. See California Proposition 103 explained and prior approval for the broader system.

A worked example of a 2020-style credit

Say a driver paid $1,500 a year, or $125 a month, and the insurer's program returned 15% of two months of premium. The credit is $125 x 2 x 0.15 = $37.50. That is hypothetical arithmetic, not a market figure. It shows why the sums felt small to individuals even when the total across millions of policies reached billions: a refund tied to a few weeks of premium cannot be large.

Now take the same driver in a state where the regulator allowed reclassification. If the insurer moved the car from commute to pleasure use for the rest of the policy term, the savings would last for the term and not just for two months, though the size depends on the insurer's rating tables. That is the difference between a one-time credit and a corrected rate. Ask which one you received.

Was it enough? California's follow-up and the court ruling

California is the best-documented case of a regulator questioning whether refunds were large enough. According to an Associated Press report carried by Insurance Journal on October 6, 2021, Commissioner Ricardo Lara directed three insurers, Allstate Northbrook Indemnity Co., Mercury Insurance Co. and CSAA Insurance Exchange, to reimburse excess premiums or face legal action. The department said its analysis found insurer groups returned on average 9% of auto premiums from March to September 2020, when the department calculated they should have returned nearly double, 17%. The three insurers were said to cover roughly 20% of California drivers, and had 30 days to respond. I did not find how those orders were resolved; check the California Department of Insurance for the current status.

A separate line of cases tested whether drivers could sue for the money. In Davis v. CSAA Insurance Exchange, decided September 8, 2025 by California's First District Court of Appeal, a class of auto policyholders argued that section 1861.05(a) required insurers to refund premiums collected during the pandemic under rates the commissioner had already approved. As summarized by Legal 500, the court affirmed dismissal, holding the provision governs the commissioner's approval and review authority and does not impose a refund duty on insurers, relying in part on Proposition 103's prospective operation. It also found a statutory safe harbor for charging approved rates. The summary notes the commissioner has prospective tools, such as commissioner-initiated review.

What that means for a reader outside California is limited: a different state's statute and courts may differ. What it means in California is that, as of that decision, the path to repayment runs through the regulator, not through a lawsuit under that section. A licensed attorney can say how the ruling applies to a particular claim.

Could it happen again?

It could, but only if several things line up.

1. A broad, sudden and measurable drop in exposure. In 2020, miles fell across the country at once; Allstate said at the time that its own telematics data showed drivers traveling 35% to 50% fewer miles in most states. A slow decline in one city would not trigger the same response.
2. A regulator with the tools and the will. Bulletins and orders worked where the department had authority over rates and a policy of using it.
3. Data to size the refund. California compared what insurers returned with what its own analysis said they should have.
4. A rate system that treats the premium as provisional. New Jersey's bulletin leaned on the idea that rates must not be excessive. Courts in other states may read their own statutes differently.

None of this predicts that a refund wave will return. It describes the conditions behind the last one.

Other reasons regulators order refunds

Most refunds that reach drivers have nothing to do with a pandemic.

Excess profit statutes

Florida's Section 627.066 requires each private passenger auto insurer group to file data every year before July 1 on earned premium, incurred losses and expenses. Excessive profit is defined as an underwriting gain over the three most recent calendar-accident years that exceeds the anticipated underwriting profit built into the insurer's rate filings plus 5% of earned premiums. If that is found, the Office of Insurance Regulation must order the excess returned after a hearing, unless the insurer shows that paying would make a member of the group financially impaired or insolvent. The refund is pro rata to voluntary private passenger auto policyholders of record on December 31 of the final year, as cash or as credit toward future insurance, with cash refunds due within 60 days of a final order. This is the statute referred to when Florida drivers hear "excess profits." Other states have different rules, and many have none; see loss ratios and rate filings: how insurers justify an increase for how a loss ratio connects to rates.

Rating errors and missed discounts

When an insurer charges something other than its filed rates, a regulator can require repayment. In Florida, a May 2024 consent order with Liberty Mutual, reported by Insurance Journal, found that changes to policyholder discounts after a rate filing was approved left 46,053 auto policyholders overcharged and 6,668 undercharged. The overcharges totaled $4.7 million, the insurer agreed to add $560,000 in interest, and the average credit or refund was $114. Customers with outstanding balances received credits and others received refunds; the order barred the company from recovering about $1.3 million in undercharges from customers.

In Minnesota, a consent order signed October 17, 2023 required Liberty Mutual to remediate several issues. Insurance Journal's report says the company was accused of failing to offer the minimum antitheft device discount and had refunded or credited over $2.27 million to 53,604 current and former policyholders, averaging $42.41. Note "former": being gone from the company does not end your claim to money.

Use-and-file disapproval

In a file-and-use state, an insurer can charge new rates before the regulator reviews them. Insurance Journal's Florida report notes that if the regulator disapproves, the insurer may have to refund. See prior approval vs file-and-use: do regulated states pay more or less? for how the two systems differ.

How to find out whether you are owed money

1. Look for the notice. If a bulletin required notice, as in New Jersey, the insurer should have told you the amount. Search email, the insurer's mobile app messages and mailed letters from the relevant period.
2. Check your billing history. Credits show up as line items or reduced installments, and a refund as a check or an account deposit. A reclassification shows as a changed use or mileage on your declarations page.
3. Search the department's site. Look for consent orders and press releases naming your insurer and your state. The companion article reading a regulatory action: consent orders, fines and what they mean explains how to read them.
4. Ask the insurer in writing. Use the script below.
5. Check unclaimed property. If a refund check went to an old address and was never cashed, it may end up with your state's unclaimed property office; most states run a search on the state treasurer's or controller's site.
6. Complain if the answer is unsatisfactory. The state department handles complaints; see how to file a complaint against a car insurance company.

Questions to put to the insurer:

• "Did my policy receive any premium credit, refund or rating correction between 2020 and now, and in what amount?"
• "Was my annual mileage or vehicle use changed because of a regulator's order or an insurer program?"
• "Have you been ordered by a regulator to refund policyholders in my state, and does that include former policyholders?"
• "If a refund was issued by check, to what address, and how do I get it reissued?"

Common questions

Did every driver get a pandemic refund?

No. Programs differed by insurer and state, and some were credits with no action needed. Triple-I said in June 2020 that in most cases customers did not need to act. Others required a filing, were limited in length, or never applied to a policy. A driver who changed insurers could have missed one.

If I drive less now, can I get my premium cut?

Possibly, but through your rating, not a refund. Ask your insurer to update your annual mileage or vehicle use, or look at pay-per-mile pricing described in pay-per-mile car insurance: how the pricing works. Insurers check mileage in different ways, so expect to document the change.

Can a regulator order refunds of rates it approved?

It depends on the state. California's 2025 Davis decision says one section of Proposition 103 does not create a right for policyholders to sue for repayment of approved rates. A regulator in another state may have a different statute, and some states have excess profit laws that require refunds in defined circumstances.

Are refunds from errors paid to people who left the company?

In the Minnesota example above, yes: the refunds went to current and former policyholders. In general, the order says who gets paid, so read it.

Will insurers return money again if profits are high?

Only where a law requires it, as Florida's excess profits statute does for private passenger auto. Elsewhere, insurers return premium through dividends if they are mutuals or through regulator action, and neither is guaranteed.

Key takeaways

• The 2020 refunds came from falling mileage; some states, including California, New Jersey and Michigan, ordered relief, while insurers also offered credits voluntarily.
• A premium is a forecast, so a sharp drop in exposure supports a refund; whether a regulator can force one depends on state law.
• California's 2025 Davis decision limits lawsuits seeking repayment of approved rates there, leaving the regulator as the path.
• Refunds also arise from excess profit laws like Florida's, from rating errors, and from missed discounts, and may include former customers.
• To check your own case, look for insurer notices, review billing and your declarations page, search the department's orders, and ask the insurer in writing.