I hope that your families are staying safe and healthy during these unprecedented times. I think everyone is starting to get a little stir crazy with Wisconsin’s Safer At Home order. Let’s hope May brings some better weather that we can enjoy from the comfort of our homes.
As you can imagine, we have received many phone calls regarding insurance carriers refunding premiums as a result of the COVID-19 pandemic which has resulted in decreased driving. Many of you have probably seen or heard television or radio ads mentioning carriers that are giving rebates in some manner. I wanted to give you a brief summary of how these things are happening and what your impact might be depending on the insurance carrier.
Here’s a general overview of the relief. The insurance companies are providing premium reductions to account for the reduced driving in three ways:
- A set amount coming back per vehicle or per policy. Some are looking at $50 per car, others $50 per car with full coverage, $25 per car with liability, others $50 per policy.
- A percentage reduction for the impacted months. Most commonly April and May have reduced auto premiums of 15% or 20%.
- A reduction at the next renewal of the policy. Some have done a percentage while others have decreased or eliminated scheduled increases.
These are immediate reactions from the carriers to help their customers based on the significant reduction of driving. A summary of our carriers is listed below.
AAA: Auto in force as of 4/30/20, 20% credit of April & May
Acuity: Renewal & new biz 7% (approx) rate reduction for policies written or renewed after 3/11/20
Allied/Nationwide: $50 per auto policy
Auto Owners: Auto 15% of April & May premiums
Badger: No rate increases before Oct 2020; losses between 4/13/20 and 7/1/20, 50% deductible rate
Chubb PL: Premium credit for personal auto average of $110 per vehicle; 35% premium rate reduction for April & May
GMIC: Auto in force as of 3/31/20, 15% of April & May premiums
Hanover: Auto 15% of April & May premiums
IMT: Reduce auto premium upon renewal; withdraw homeowner base rate increases
Kemper: Auto in force as of 4/30/20, 15% credit on April & May; auto in force as of 5/31/20, 15% credit on May & June
MetLife: Auto 15% credit on April & May
Progressive: Auto as of 4/30/20, 20% credit on April & May
Safeco: Auto in force as of 4/7/20, 15% refund of two months
Secura: 15% refund of April and May auto premium for eligible MILE-STONE policyholders, subject to regulatory approval
Sheb Falls/Donegal: PENDING
Travelers: Auto 15% on April & May
West Bend: $50 per policy for policies in force since 3/11/20
WI Mutual: $50 per auto policy with at least one full coverage vehicle; $25 per auto policy that is liability only
Keep in mind, this is an extremely fluid situation. We don’t know exactly how long things will be impacted, but it would appear April and May at a minimum. Carriers are also changing coverage and extending payment terms as a result of the pandemic. A lot have indicated that they will not cancel policies for non-payment of the premium and most will make payment arrangements as needed. It is unclear at this time how things will unwind. Indications would appear that after the extended period of cancellation or payment arrangements end, the premium for the policy will still be due. As stated, that is how it looks today, but the situation is extremely fluid and changing constantly.
We have seen government intervention along the way through the Wisconsin Office of the Commissioner. As an example, the OCI mandated in March that insurers cannot deny a claim based on a person using their personal vehicle to deliver food. That is typically an exclusion on a personal auto policy, but given the extenuating circumstances surrounding COVID 19 and significant need for delivery in a lot of cases, they forced an order to provide coverage.
This is strictly my opinion, but I believe there could very well be more involvement coming on the back end as these things start to unwind and the picture on the impact of everything on the insurance industry becomes more clear. This might mean good news for insurance customers because if reduced driving creates higher profits for carriers, we may see government pressure to share those with policyholders. It is hard to say what the ultimate impact will be, so keep an eye out for information as it becomes available.
Most importantly, we hope each and every one of you and your loved ones gets through this pandemic safely and in a healthy manner. As the picture starts to become more clear in the upcoming weeks, please let us know if there is anything that our agency can help you with. We are here for you.