With 95% of Americans under stay-at-home orders, there are far fewer vehicles on the road. And fewer vehicles means fewer accidents. For insurance companies this represents a major windfall, one that many companies are giving back to their customers – for now.
Auto insurance rebates and reductions due to COVID-19
With the coronavirus outbreak keeping most drivers off the road, Allstate has announced a 15% rebate on auto insurance premiums for all customers for April and May. This rebate will be credited to a customer's bank account, credit card, or Allstate account balance. In addition, Allstate will also be expanding personal vehicle coverage to include deliveries of food, medical supplies, and other important goods during the pandemic. (Under normal circumstances use of a vehicle for commercial deliveries requires a commercial auto insurance policy.)
Following in the heels of Allstate's announcement, several other insurance companies have lined up with various rebates and premium reductions of their own. Geico customers will receive a 15% credit on the entire amount of their next six-month renewal of their auto policy, while State Farm is promising a 25% rebate on the period spanning March 20 through May 31. Similarly, Farmers Insurance will credit 25% of April premiums back to customers and will also give a 20% credit back to business policy holders for April and May.
These companies have signaled an intention to continue discounting auto insurance policies if the stay-at-home orders persist into the summer. Many insurance companies are also pausing cancellations of policies for non-payment during this initial phase of the pandemic as job losses mount across the country.
Go to your insurance company's website for further information on their response to the coronavirus pandemic and whether you can expect to receive a rebate or credit. If you have a commercial insurance policy, it is also important to find out how that policy will be affected.
Businesses and their employees' car insurance
If you run a business with workers who typically drive as part of their jobs, there are important considerations related to your employees' auto insurance. If these workers are currently working from home, they could be tempted to reduce their auto insurance premiums further by decreasing certain coverages now that they are rarely on the road.
This could eventually catch up to your organization once these employees are on the road again. It is important to require a certain level of auto insurance coverage for all employees who drive as part of their jobs. This is because an employer can be held liable for an employee's car accident while on the job if the employee's own insurance is not enough to pay for bodily injuries or property damages.
If your workers are still on the road right now, making deliveries or carrying out other essential jobs, it is all the more important to make sure that they maintain sufficient insurance coverage during the economic downtown we have entered.
Protecting employees and employers with sufficient auto insurance coverage
We recommend that employers mandate a 250/500/250 policy for employees who operate a vehicle on behalf of the company. That's coverage of up to $250,000 per bodily injury, $500,000 total bodily injuries, and $250,000 for property damage. This coverage not only protects the company from liability but also protects employees in the case of being struck by an uninsured or underinsured motorist.
As financial losses worsen, people in economic distress will be more likely to let their policies lapse or decrease their coverage to their state minimum. Even with insurance companies offering rebates, credits, and pauses in cancellations, as the COVID-19 pandemic drags on some drivers will make the pragmatic decision to drive with insufficient insurance. If they are rarely leaving the house, they may think it's worth the risk.
But if you or an employee is struck by an uninsured or underinsured driver, you will may be stuck with significant medical bills that you will be responsible for – unless you carry sufficient auto insurance to protect yourself.
For employers, it is important to remember to verify every six months that employees have renewed their car insurance policies and maintained the required coverage. Otherwise, an employee who lets a policy lapse or reduces coverage could leave the company liable for an accident that occurs while on the job or could become mired in a lawsuit because they caused an accident on the way to the grocery store.