Firms lower car insurance rates in response to Covid-19 fallout

Drivers whose commuting patterns have changed due to the lockdown may be eligible for lower car insurance rates. Insurance companies have offered various relief measures to consumers as the pandemic-triggered, work-from-home arrangement continues to put a lid on the volume of traffic on roads. 

“Personal driving habits have changed,” said Jennifer Beck, senior consultant of external communications with Belairdirect in Toronto. “As the situation with COVID-19 continues to evolve, we will work with our customers to help alleviate the pressure by providing case-by-case solutions.”

Don Forgeron, president and CEO of the Insurance Bureau of Canada (IBC), said in a statement that the relief measures offered by insurance companies can result in savings of $600 million to consumers whose driving habits have changed significantly. 

The relief measures are meant to alleviate the financial burden of Canadians who are going through “an incredibly challenging and uncertain time,” Forgeron said. Thousands of Canadians have deferred their premium payment. 

“Covid is a game-changer that has less people on the road,” said Adam Mitchell, president of Mitchell & Whale Insurance Brokers Ltd. in Toronto. 

Mitchell advises drivers to keep their driving profiles with insurance companies up to date. “If you are not driving, certainly don’t pay for the risk of somebody who is,” he said. 

Relief measures that insurance companies have extended to consumers include premium reductions, coverage extension, payment deferrals and fee waivers.

Premium Reduction

People who work from home and drive less may qualify for a premium reduction. Belairdiect customers can apply to adjust their kilometres driven to get an average savings of 15% on their premium for the next three months. Those who park and store their cars safely can also expect an average savings of 75% on their monthly premium for the duration when they are not using the car.  

Aviva Canada offers a premium reduction by up to 75% for clients who have stopped driving entirely and a 15% discount for those who drive less during the pandemic. The company is also freezing premium increases at renewal for the next 12 months until further notice. 

Policyholders with the Co-operators may be eligible for a minimum 10% refund on premiums paid from April 1 to May 31. The Reduced Driving Refund will be applied beginning in July, and the policy must be active on May 31 to qualify. The cut-off date to apply for the refund, which is not available in British Columbia, Saskatchewan and Manitoba, is August 31.  

Allstate Canada offers a one-time payment equal to approximately 25% of the monthly auto premium.

Coverage Extension

For drivers who use their vehicles to provide delivery services, Allstate Canada has extended coverage to include commercial purposes, which are typically not covered by standard personal auto insurance.  

Belairdirect also offers flexibility to those who use their vehicles during the crisis to make deliveries or run a home-based business.

Payment Deferrals

Aviva Canada allows their customers with cashflow problems due to the pandemic to defer premium payment for up to 90 days without an additional fee or a penalty. 

Allstate Canada also offers payment flexibility through a deferral process that gives customers the option to pause their insurance payments for up to 90 days.

Fee Waiver

Some fees that are typically charged for not meeting financial obligations have also been suspended. Aviva has temporarily waived non-sufficient-fund fees without interruption to coverage, while Belairdirect has waived fees for missed payments.

Drivers whose commuting habits have changed should contact their broker, update their driving profile and get a new rate, Mitchell advised. They can also shop around to see if other companies might offer a better rate.  

“Now is definitely the time to check the market,” he said.