By now, you may be feeling the pinch and possible insecurity in your short-term finances. As one of the household’s largest monthly bills, you may be worried about paying your automobile insurance premium right now, in particular. To add further insult to injury, under the current “Stay Home, Stay Safe” order, many Michigan families and small businesses aren’t even using those vehicles right now. Many are asking “why pay for insurance on something I can’t even use?” This is especially true for those whose finances are uncertain or whose small businesses have had to close due to COVID-19. In addition to the Governor deeming the insurance industry as essential and therefore must continue processing and paying claims, the State of Michigan’s Director of the Department of Insurance and Financial Services (DIFS) issued a Bulletin on April 13, 2020, asking for insurer flexibility during COVID-19 on auto insurance premium payments. The Director asked for a 60 day “grace period” to pay for past due insurance premiums before canceling coverage. In addition, the Director also asked for insurers to waive late payment fees, allow people to suspend certain types of coverage, consider alternative payment plan options, and flexibility when it comes to filing claims and certain notice requirements.
Insurer flexibility during COVD-19 is, in short, a good thing. However, the following are some recommendations that might help you save yourself from some trouble during this crunch in the long-run:
Do not automatically assume your insurance provider is extending insurer flexibility during COVID-19.
This is simply a recommendation by the Insurance Commissioner, not an order. Before discontinuing or altering your payments, you should check with your specific insurance provider to see if they are even willing to be flexible. If you miss a payment, your insurance provider may void your policy altogether. Without mandatory auto no-fault coverage on your automobile, you cannot lawfully drive in the state of Michigan.
Get proof of your insurer’s flexibility options in writing.
A verbal conversation over the phone about premium payment flexibility is not enough. You need to request proof of flexibility either by mail or email confirmation. If you are in an automobile accident during the pandemic and missed a premium payment or did not pay in full and have no proof of your negotiations with your insurance provider, your carrier could claim your failure to pay voided your policy. A canceled policy means no no-fault benefits, including medical expense benefits, wage loss reimbursement, and more, putting yourself into even further financial strain. Make sure to get everything in writing.
If you change your type of coverage now, make sure to change it back.
If your premium is currently set on your auto insurance policy based on factors such as commuting and you find yourself not leaving the home, you may be able to get a reduction in your premium. However, if you change the type of coverage you carry on your vehicle based on its primary usage during coronavirus, it is absolutely essential to change it back once you resume commuting.
If you drop your policy completely, you must remember to add it back when the dust settles.
As auto accident attorneys, we, unfortunately, see instances of a lapse in auto insurance coverage all the time. If you go the route of dropping your vehicle’s insurance coverage altogether right now since you’re not even using it, you have to remember to add it back as soon as you start driving again. If you start driving a car without insurance coverage and are in an accident, your insurer will not pay a penny toward your PIP benefits. Furthermore, your insurance company could claim you committed insurance fraud if you start using the vehicle again without notifying them to reinstate your coverage. Do not assume your provider will know when you go back to work and start driving and commuting again.