How COVID-19 is impacting home, auto insurance payments

Fact-checked with HomeInsurance.com

4 min read

COVID-19 has impacted almost every facet of life, causing unexpected financial strain for people worldwide. Among stressors like job furloughs and layoffs, many consumers are wondering how they’ll pay recurring bills like insurance payments.

Companies are stepping up in a number of ways — some of them in response to government mandates — including extended grace periods, relief from insurance premiums, rebates and more.

State insurance commissioners are mandating, or at least encouraging, companies to take action to ease the financial burden for consumers. For instance, California requested all insurance companies to offer at least a 60-day grace period for premium payments. Oregon ordered all insurers to postpone policy cancellations and extend claim reporting deadlines. And North Carolina urged insurance companies to waive late fees, offer payment plans and extend grace periods.

For more detailed information about guidelines in your area, check your state’s insurance commissioner’s website.

Here’s more information on how COVID-19 might impact your home insurance and auto insurance needs and rights.

How COVID-19 is impacting homeowners insurance

With more employees working from home following CDC guidelines, some home insurance coverage may need a boost. Ray Farmer, president of the National Association of Insurance Commissioners (NAIC) and director of the South Carolina Department of Insurance, recommends speaking with your insurance agent to see if there are gaps in your current coverage and to help you understand what is — and isn’t — covered. (Concerned about paying your mortgage? Here’s what lenders are doing to help.)

Because of the developing situation, insurance companies are adapting quickly.

“Many states have taken steps to encourage insurance companies to relax due dates for premium payments, extend grace periods, waive late fees and penalties, freeze cancellations and non-renewals due to non-payment and allow premium payment plans,” Farmer says.

The changes also extend to adjusters and claim handlers, some of whom use technology to verify claims. Customers may be asked to provide video or photo proof of loss in the absence of an in-person adjuster.

“In today’s innovative landscape, much of the industry is well-equipped to handle claims processing through online tools that allow for prompt service and payment to the consumer,” Farmer says.

New homebuyers

While unemployment claims are on the rise amid COVID-19-related layoffs, mortgage rates are near historic lows. Experts say the outlook for the real estate market largely depends on how the pandemic plays out.

For buyers, purchasing a home now will have some nuances, including signing closing paperwork at a distance and working with lenders via telephone or online tools.

“Some (insurance) companies may use video conference tools to conduct inspections,” Farmer says.

Existing policyholders

If you’re sheltering in place, take the time to contact your insurance agent. And if you’re working from home, speak with your insurance adviser to ensure you’re fully covered.

“It is important for consumers to be sufficiently covered for property, liability and business expenses,” Farmer says. “Business property is covered under the standard homeowners policy, (but) the limit for this coverage is relatively low. A home business endorsement or an endorsement to increase limits may be necessary,” Farmer says. ​

Likewise, there may be certain types of supplemental coverage you don’t need.

“If a consumer has a policy on a short-term rental property that may now be empty due to social distancing and stay-at-home orders, they should speak with their insurance company about pausing certain coverages,” says Farmer. He adds that “it’s important that the property is still insured from loss like fire, wind and hail, but a supplemental policy that covers home-sharing may not be needed if the property is not being rented.” In either case, speak directly with your agent to begin the process.

How COVID-19 is impacting car insurance

Just because you’re driving less — or possibly, not at all — doesn’t mean you can expect your insurance premiums to decline.

“While some automobile owners may be driving less during the COVID-19 crisis, it is too early for that to be a significant rating factor,” says Scott Holeman, media relations director for the Insurance Information Institute. “Auto insurance rates are established using multiple years’ worth of data, which leads to gradual premium changes. If we begin to experience a sustained reduction in auto claim frequency, that could lead to favorable rate changes for drivers.”

What to do if you can’t afford your premiums

If you’re having trouble paying your insurance premiums, reach out directly to your insurance agent. While most insurers have information and applications online to initiate grace periods, payment deferrals and other helpful programs, having a conversation to discuss the nuances of your situation and your unique challenges may be helpful.

“We encourage customers facing financial challenges to call their State Farm agent,” the company said in a statement. “State Farm agents are working with their customers one-on-one providing payment options. Each customer’s situation is unique. A conversation with their agent will help address options such as payment plans and discounts.”

During the call, you can explore whether it makes sense to scale back on certain elements of your coverage based on your current needs or add additional coverage. For example, if you’re using your car to make deliveries to earn extra cash, you may need more insurance.

What to do if you need to file a claim

Check with your insurance company to find out the current terms and deadlines to file a claim.

Companies like State Farm are making adjustments to limit in-person contact. Their agents are offering virtual claim handling when appropriate, as well as virtual and drive-thru inspections.

Don’t try to cancel your car insurance

Even if you’re driving infrequently or not at all, it’s not recommended to cancel your coverage completely, as accidents can happen even if your vehicle is parked (think natural disasters or impact from another moving car).

Plus, all 50 states have financial responsibility laws, requiring everyone with a registered car to be able to pay others if you cause an accident.

If you’re caught driving without car insurance, you could be fined, face jail time or have your license suspended. It’s not worth the risk.

What car insurance companies are doing to help

In response to fewer drivers on the roads and reduced incidents of crashes and fender benders, some insurers are offering rebates.

For instance, Allstate has announced its Shelter-in-Place Payback program to give more than $600 million back to auto insurance customers in April and May. Geico and Liberty Mutual have announced similar offerings, while companies including Progressive have released statements saying they’re exploring similar programs to give back to customers.

The bottom line

Take a critical look at your insurance coverage and make sure you’re both appropriately insured and not spending money on coverage you don’t need. If you anticipate having trouble paying your home insurance or auto insurance premiums, talk with your agent to explore your options.

To stay up to date with the latest insurance industry updates, sign up for alerts with your insurance provider and check often with trusted news providers and industry organizations, like NAIC’s Coronavirus Resource Center.