Auto Insurance Refunds during Coronavirus: All You Need to Know

As the Coronavirus hit the world in early 2020, many countries came to a standstill. Even though this pandemic affected all realms of life across the globe, one that seems the most impacted is our finances. Although many of our income sources have been curtailed, the number of expenses we incurred on groceries, rent, utilities, insurance, etc. have been consistent irrespective of our earnings.

Business came to a halt as the world looked for a cure. However, of the few industries that had benefited from these adverse situations was the insurance industry. Lockdown impositions, schools and businesses being shut, and work from home measures being followed by many companies meant that Canadians could not drive as much as they would have otherwise. 

How Much Can I Save?

As an ethical business practice, these massive savings ought to be passed on to the policyholders. The relief measures that are being offered by auto-insurers across Canada are not uniform. The criteria for availing the refund, the amount of refund, and the time period to which they apply differ across companies. 

While there are some companies not offering any sort of relief to their customers; some wait for the customer to approach them for a discount. A few insurers are offering standard reductions and refunds to all their policyholders, regardless of the amount they have used their vehicle during the pandemic.

• Allstate Canada is one such auto-insurer that has announced that anyone holding an auto insurance policy with them as of April 8, 2020, will receive a refund in May valuing approximately 25% of the value of the monthly premium payment. They also offered a second “Stay at Home Payment” to customers who have active auto policies as of July 6, 2020, to receive approximately 25% of their monthly auto premium by cheque in August 2020.
• Gore Mutual Insurance is another insurance company that is offering all its registered policyholders as of April 2020, a “one-time refund” which amounts to around 20% of its three-month worth of premiums.
• Metromile provides pay-per-mile car insurance, which was particularly beneficial during these times when driving was a bare minimum for many. 

Instead of discounts and refunds, some insurance companies are offering flexible payment options to customers who are struggling with their finances as a result of the pandemic. Many member companies of the IBC have waived fee charges on delayed premium payments and insufficient funds.

In mid-April, the provincial government in Ontario allowed auto insurance companies to provide premium rebates to consumers up to 12 months after the COVID-19 emergency ended.

Where to Expect Savings in Auto-Insurance?

The premium you pay is calculated after considering various factors like how much you drive and the primary use of your vehicle (official or personal). If you are working from home, your insurance policy should reflect this change in use and reduce your premiums accordingly. It would be wise to reassess your policy and modify it according to your needs.

Here are a few options you could resort to while looking for a lower premium:

Deferral options

A deferral means asking your insurance provider to pause your monthly premium payments for a certain period of time, usually until your stream of income resumes. These payments are not exempted but only postponed. They become due along with your regular premium payments when your insurer demands them.

Moreover, you would not need to pay interest on these deferrals. According to the IBC, this option will be available for 90 days, after which you need to arrange to pay your deferred payments along with regular premiums.

Waiving NSF fees

The insurance industry is ready to waive Non-Sufficient Funds (NSF) fees that are normally charged for insufficient balance in your account.

Potential discounts

90% of the insurance providers in Canada are members of the IBC. IBC member companies are offering flexible payment options to customers facing financial hardships. Instead of cancellations, it allows customers to opt for a later payment date. This can be done without any standard charges that would otherwise be applied.

Extension of coverage

Some insurers are extending your current auto insurance coverage, at no extra charge, if you are now using your personal vehicle to deliver food, medicine, and other products for commercial purposes during the pandemic. Under normal circumstances, you would have been required to opt for additional coverage to use your car for these purposes.

Reassessing your Policy

Since you might be driving fewer miles during the pandemic, you can consider making adjustments to your policy, like reducing third-party liability down to the minimum, or dropping collision insurance cover.

Similarly, since comprehensive coverage is not required by law you can drop it. If your insurer uses telematics, it helps identify your driving pattern, frequency, etc. which has a possibility of reducing your premiums.

Did your Auto-Insurer refund you enough for driving less?

Due to significantly reduced driving during the Coronavirus pandemic, auto-insurers made huge profits from fewer crashes. Regardless of the figure of the profits, most of the insurers didn’t return more than 50% of a month’s premium. 

As a consequence of the increasingly high profits, some insurers gave credits to their customers on their invoices; others issued reductions on their premium rates; while there were few that offered a two-month rebate on premium payments. In many cases, customers weren’t lucky enough to get a refund or rate reduction unless they approached the company for the same.

It is important for customers to be aware of how auto-insurers have responded in financial aspects to the coronavirus pandemic, and where they stand with respect to customer care when compared to other companies.

• First and foremost, customers should know if they have received what was promised to them by the insurer. Check if you got a refund, credit, or rate reduction on renewal if promised. Check for any notice from the company, or contact your insurance agent.
• Compare how other insurance companies handled the pandemic situation, and use it as a measure to ask for a better policy premium option from your insurer or consider making a switch. 

It is only fair to share a part of windfall gains with the most prominent stakeholders of your business i.e. your customers. And the auto insurance industry has done just that. The pandemic has caused much financial stress to people around the globe and any meagre help might make a significant impact. 

If you haven’t been treated fairly by your insurer, it is probably time to switch to someone dependable like Surex, who values its customers and understands the importance of financial management in these tough times.