How COVID-19 is impacting home, auto insurance payments

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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 will pay recurring bills like insurance payments.

As the pandemic continues, 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.

Although many mandates issued by state insurance commissioners early in the pandemic have expired, many insurance companies are still offering extended grace periods, waiving late fees and extending coverage to delivery drivers. The pandemic continues to be a rapidly evolving situation; talking to a representative about your specific situation may help you to understand how your insurance company is responding to the health crisis. And for more detailed information about guidelines in your area, check your state’s insurance commissioner’s website.

Although the pandemic has been happening for over a year, COVID-19 might still be impacting 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 companies are providing additional coverage. 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 is not — 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

After reaching near-historic lows in 2020, mortgage rates have begun to climb. The combination of these rising mortgage rates and low housing inventory has created a highly competitive real estate market.

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

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

Existing policyholders

If you are continuing to shelter in place, take the time to contact your insurance agent. And if you are working from home, speak with your insurance adviser to ensure your homeowners policy provides coverage.You may see an increase in your home insurance rates if you have to add coverage, but the protection you gain could be important to your financial planning.

“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 do not 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 might be driving less — or possibly, not at all — does not mean you can expect your auto insurance rates 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 cannot afford your premiums

If you are having trouble paying your insurance premiums, reach out directly to your insurance agent. Your insurance company may be able to extend the grace period on your policy, within reason, to allow you time to pay. You may also discover discounts or changes that you could make to your policy that could lower your premium.

“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 are 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.
Many companies are continuing to make adjustments to limit in-person contact. Their agents are offering virtual claim handling when appropriate, as well as virtual and drive-thru inspections.

Do not try to cancel your car insurance

Even if you are driving infrequently or not at all, insurance experts do not recommend that you 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 are caught driving without car insurance, you could be fined, face jail time or have your license suspended. And if you cause an accident without insurance, you could also be facing out-of-pocket costs for the damage that you cause.

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 offered rebates early in the pandemic.

For instance, Allstate’s Shelter-in-Place Payback program gave more than $1 billion back to auto insurance customers in 2020. Many other companies, including Geico, Liberty Mutual and Progressive, offered similar programs.

If you have taken up delivery driving during the pandemic, many car insurance companies have extended delivery coverage for free. However, be sure to check with your agent about this coverage, as some companies have begun to roll back these programs and you may now need to pay for the coverage.

The bottom line

Take a critical look at your insurance coverage and make sure you are both appropriately insured and not spending money on coverage you do not 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.