Insurance and COVID-19: Personal Automobile and Property Insurance

 

April 26, 2020

Debbie Arnold
Registered Insurance Broker

Group Business Development Manager
Sound Insurance Services

Automobile and property insurance carriers have responded to the pandemic crisis in various ways. Here is a review of some of the changes.

A recent CBC article erroneously described “working from home” as running a business out of your home. If you had an office that you normally work from but are now isolated at home, this is incidental and automatically covered. You are not running a business out of your home. No action needs to be taken with respect to your personal property insurance. However, if you own a small business that you are now running out of your home, then you would have to contact your agent/broker to ensure you are properly covered.

However, in general, most insurers will do the following:

  • Defer monthly payments for one month. The missed payment will be spread over the remaining payments over the term of the policy.
  • Waive NSF charges
  • Remove or “suspend” coverage on a vehicle. If there is only one vehicle on the policy, insurers will “suspend” coverage by way of an OPCF 16. This endorsement will leave comprehensive coverage in force and activate Third Party Liability, Accident Benefits, Direct Compensation Property Damage and Collision coverage in the event of a loss if the vehicle is not being operated. For example, if a vehicle is parked in the driveway or in parking lot and a third party collides with it, Direct Compensation Property Damage will respond. If the vehicle becomes dislodged and strikes a third party, Liability will be activated as well as collision. Removing all but comprehensive (fire, theft, vandalism, anything that is not a collision) is only available when there is another vehicle on the policy. This is the up to 75% savings! reported in the media.
  • Amend the use of the vehicle(s) to pleasure only and reduce the annual mileage for a premium credit if the vehicle was rated as commuting or used for business. If the vehicle was already rated as pleasure only, no premium credit will be generated. This is the reported up to 15% savings in the media.

 

 



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Despite the broad reporting in the media, not all carriers are providing automatic rebates. Although insurers have seen significant reductions in claims activity during this unprecedented shut-down, the current savings in claim payouts is offsetting prior losses. Prior to the shut-down, insurers in Ontario were paying anywhere from $1.05 to $1.21 for every premium dollar received.

The dramatic reduction in driving and insurance claims related to COVID-19 related public health restrictions should encourage insurers to review their rates, but this will not happen immediately. Most insurers have put a freeze on rate increases for the time being. Hopefully, when we’re on the other side, the savings they’ve incurred will be passed along to the consumer. In the meantime, if you require changes to your policies, contact your agent or broker.

The above changes or deferrals must be communicated to your agent or broker as each policyholder will have different requirements.
Important: The policyholder must advise the carrier/agent/broker to re-activate coverage.

Specific carriers have gone beyond the above as follows:

Allstate/Pembridge/Pafco
  • Effective April 8, 2020 a 25% one time rebate will be generated based on one month’s premium.
  • Payment deferrals upon request
  • Extension of coverage for volunteer food, medicine or grocery delivery
  • Suspension of coverage on Leased/Financed vehicles allowed with confirming letter from lessor or lienholder
Aviva/Aviva Traders
  • Payment deferrals upon request
  • Stay-at-home endorsement (the OPCF 16 described above)
  • Cancellations for non-payment have been suspended
  • Extension of coverage for volunteer food, medicine or grocery delivery
  • Removal of vacancy term for secondary dwellings
CAA
  • 10% rate reduction on all automobile and home renewals, date to be determined
  • My Pace – pay as you go option – restrictions apply
Economical
  • Payment deferrals upon request
  • Cancellations for non-payment, will apply 30 day hold upon reinstatement
  • Waive NSF fees
  • Extension of coverage for volunteer food, medicine or grocery delivery
  • Suspension of coverage allowed
Gore Mutual
  • Effective April 9, 2020, a one-time rebate equivalent to 20% of 3 months’ premium paid by cheque
  • Suspension of NSF fees and cancellations for non payment to April 30
Intact/Novex
  • Payment deferrals allowed for 30 days
  • Waive NSF and reinstatement fees
  • Extension of coverage for volunteer food, medicine or grocery delivery
  • Changes to vehicle use for 3 months may generate up to 15% savings
  • Suspension of coverage may generate up to 75% savings
Royal & Sun Alliance
  • Waive NSF fees
  • Extension of coverage for volunteer food, medicine or grocery delivery
Travelers
  • Cancellation for non-payment and non-renewal suspended until May 15, 2020
  • Effective April 22, 2020 a one-time rebate of 25% on one month’s automobile premium
  • If insured with Chieftain and suspending coverage on a vehicle in a multiple vehicle household, a new policy for that vehicle will be issued through Travelers.
Wawanesa
  • NSF fees waived until May 25, 2020
  • Payment deferrals available on case by case basis

 

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