Good news for drivers: State Farm will refund $5 billion to its car insurance customers, paying out an average of $100 per vehicle as part of the largest dividend in company history.
The announcement cited "stronger-than-expected underwriting performance," which is insurance speak for "we charged policyholders more than it cost to insure them." In financial results released Thursday, State Farm reported a $4.6 billion underwriting gain for auto insurance in 2025, up from a $2.7 billion loss the year before.
In addition to refunds, State Farm said it has lowered car insurance rates in 40 states by an average of 10%. These rate reductions will reportedly save customers $4.6 billion on an annual basis.
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When will State Farm refunds will go out?
State Farm said it is giving refunds starting this summer to policyholders for 49 million covered vehicles.
The move marks a shift in the auto insurance market. Just a couple years ago, car insurance premiums were rising sharply, and motor vehicle insurance was leading all major items tracked by the consumer price index for inflation. At one point, car insurance inflation was above 20% year over year.
For America's 238 million drivers, it's natural to wonder: After dealing with years of rising vehicle repair costs, did insurers overcorrect by raising premiums too much? With the average monthly car insurance bill costing drivers $173 per month in the U.S., many customers certainly feel that way.
But insurance executives are defending their underwriting.
"We saw positive trends in auto collisions — lower repair costs when cars have accidents," Axios reported State Farm executive Chris Schell said. "That's not just a State Farm phenomenon. That's across the entire industry, but it did drive meaningful improvement to our bottom-line underwriting results."
Will other car insurance companies issue refunds?
Car insurance experts said in their 2026 forecasts that premiums would likely get cheaper this year, and those predictions are already playing out.
In Louisiana, where State Farm recently lowered rates, state officials said a reduction in physical damage claims is the top factor behind the trend.
"Because fewer accidents are contributing to these lower losses for insurers, we should not necessarily expect to see this level of decrease in future years," Louisiana Insurance Commissioner Tim Temple said in a recent news release.
State Farm said it "is uniquely positioned to provide value directly to customers rather than shareholders," and at this time, competitors have not revealed similar plans.
An Allstate spokesperson said the company recently adjusted premiums, though the representative did not address Money's question about any potential refunds.
"Allstate made protection more affordable for customers in 2025," the company reported earlier this month. "Through tailored coverage reviews, we reduced premiums by an average of 17% for 7.8 million auto and homeowners customers and lowered auto insurance rates by an average of 9% for qualifying customers in 32 states."
In Florida, Progressive is issuing nearly $1 billion in auto insurance refunds to 2.7 million policyholders, according to Gov. Ron DeSantis's administration. However, those refunds are related to recent state reforms, unlike the national State Farm dividend.
On Friday, Progressive restated a commitment to "fair, competitive and accurate insurance rates" in an email to Money but did not mention specific price-relief plans.
"We routinely review market and business conditions to ensure our policies are accurately priced, and we'll continue to assess our data and monitor trends, adjusting our pricing accordingly," a spokesperson said.
Geico did not respond to a request for comment.
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