Keeping insurance coverage current is something that many people are struggling with. The COVID-19 pandemic has put a damper on the saying, "business as usual." Both individuals and businesses are greatly impacted, whether they are shut down due to state mandates, interrupted because of the lack of employees' ability to work, or there is lack of business due to financial constraints. People are finding it difficult to keep up with their insurance premium payments.
This is an incredibly tough time, as revenues have dropped or disappeared entirely, but insurance coverage is still just as important to protect your business.
Ask Your Insurance Agent for Help
We strongly recommend not allowing insurance policies to cancel due to lack of funds or fear of needing the money for other purposes. Instead of letting a policy cancel, call the insurance company or agent and ask for help. Most insurance companies are extremely accommodating during this time, and are generally willing to defer payments, extend payment plans, or do whatever else is needed to help clients.
The key is communication. Don't let a policy just cancel, call the carrier or your agent and ask for help.
Tips to Help Keep Your Insurance Current
Workers' Compensation Insurance
Switch to a Pay-As-You-Go Reporting Policy
Many insurance carriers are willing to switch policies mid-term to “pay-as-you-go” reporting policies. If your company's payroll has dropped, this solution can help with your immediate cash flow, as you will only pay premiums on actual payroll paid out (instead of the annual estimate).
Reduce Your Annual Payroll Estimate
If the carrier does not allow a mid-term switch or you prefer not to go to this type of reporting, you should also ask your agent to reduce your annual payroll estimate for the policy term. This will reduce your premiums immediately and you don't have to wait for money back after an audit.
Change Your Estimate of Receipts
Most premiums for liability insurance are based on either the number of employees or an annual estimate of receipts. Work with your agent to come up with a new estimate of receipts based on this downturn. As with Workers' Compensation, the carrier can change your premiums now instead of at audit time.
Commercial Auto Insurance
Ask for a Lay-Up Period
If your business is not currently using automobiles listed on a commercial auto policy, ask your agent if your carrier will offer some type of “lay-up” period and give you a credit for not using the vehicles.
Personal Auto Insurance
Ask If Your Carrier Is Offering a Credit
Rates generated for personal auto insurance assume most people are actually driving their cars (and increasing the chance of claims). Since many people are either not driving their cars or have reduced their driving due to the pandemic, the exposure has decreased.
Many insurance carriers have already stated they are giving credits to all policyholders based on this assumption. If your company has not already notified you of this, give them a call and ask if they are offering it. Be proactive and ask about any other programs available to help you save money. This may include bundling home and auto, paperless discounts, and EFT discounts.
Many states have issued orders related to the non-cancellation of insurance policies and grace periods for premium payments. Please check your state's website for more information.
In New Jersey, for example, Governor Murphy has signed an order requiring insurance companies and premium finance companies not to cancel policies for non-payment of premiums.
If you get a cancellation notice, make sure the insurance company is aware of any state orders regarding the non-cancellation of insurance policies, or call your agent to help on your behalf.
Work with your insurance company to come up with premium payment arrangements, as you will still owe those premiums at some point in the future.
If you need assistance or additional information, we encourage you to contact us.