As the coronavirus pandemic continues to take hold on Americans and the economy, many are struggling to make ends meet, which includes paying their auto insurance bill.  Should auto insurers be mandated by the state to provide payment relief to those policyholders affected by the coronavirus?

The latest claims for unemployment benefits climbed to 281,000 last week, as reported by the Department of Labor. Whether temporarily or for good, more businesses are closing their doors across the United States. People are now out of a job or working reduced hours, working remotely, or staying home to care for their family. As a result, and not surprisingly, the number of cars on the road has dropped significantly. 

And fewer cars on the road means fewer claims are likely to be made. At least that’s the argument proposed by two major consumer groups. 

'Reasonable and necessary' car insurance relief

The Consumer Federation of America (CFA) and the Center for Economic Justice (CEJ) are the two consumer groups pushing for auto insurers to provide car insurance payment relief to policyholders who are being affected by the novel coronavirus. 

In a letter addressed to state insurance commissioners, they are asking that insurance companies be directed to “provide premium offset payments to policyholders whose driving has been affected by COVID-19.”

The letter goes on to say that having auto insurers provide payment relief is “reasonable and necessary.” 

“For millions of Americans impacted by COVID-19 social distancing measures – who are no longer driving to work because they have been directed to work from home or their employer has closed down – the annual mileage on which their auto insurance premium is based has suddenly and dramatically become incorrect. If a policy was rated based on commuting to work, then anyone who is staying home and only driving to the market for supplies is paying a premium that is now excessive.”

In the letter, the CFA and CEJ urge the state to take the following actions: 

  1. Direct auto insurers in each state to contact their policyholders and offer premium relief to any policyholder who can demonstrate their miles driven has been impacted by COVID-19 safety measures.

  2. Direct insurers that such premium relief is permitted by state law and is not a rebate.

  3. Direct insurers to file notices with your department that they will send to policyholders and the process and timing they will use to provide relief.

  4. Direct insurers to report on a monthly basis anonymized information on each request for relief received.

  5. Encourage drivers to contact their auto insurers for relief.

Auto insurance companies offering relief

Some auto insurance companies have already put in place their own payment relief programs to policyholders. 

Liberty Mutual is extending payment dates and waiving fees. They have also empowered their employees to work with each individual customer to provide personalized support.

Allstate is offering auto and home insurance policyholders a special plan allowing them to delay payments for 60 days without a penalty.  

GEICO is pausing cancellation of coverage due to non-payment and policy expiration, effectively immediately. The pause will remain in effect through April 30, 2020. 

What this means for drivers

If your driving habits have changed as a result of the coronavirus and you think you may not be able to pay your car insurance bill, contact your insurer immediately. Any lapse in coverage could result in your premiums increasing.  

While some auto insurance companies haven’t rolled out specific payment relief details yet, they are encouraging their customers to contact them. Many insurers have said they will work with customers to provide some sort of financial assistance, whether that’s in the form of special payment options, waived fees or something else.