What has changed within the insurance industry since the COVID-19 crisis hit?

• Most companies are giving 30 day grace period on making payments

• Illinois put a moratorium on cancelling policies for non-pay.  At this point there is no end date for this moratorium

• Auto carriers are giving discounts on premiums for the months of April and May because are not driving and claim activity is way down.  The amount of discounts and how it is distributed varies among carriers but it is generally between 15% and 20% of the premium for those months.

• Carriers are generally providing flexibility in adjusting coverages or even expanding coverages.  For example, some of our carriers are now covering the auto exposure for people are delivering food.  This has always been excluded on a personal auto policy but some carriers are now covering this exposure.  I will say that companies vary in how they are handling things so you want to check with your agent and your company on how they are handling things.  What may be true for one company may not be true for another.

How has underwriting changed within the life insurance industry?

• As with the home and auto industry, different carriers are doing different things.

• Some have put a hold on writing individuals over 70 years old and lower if they have any history of respiratory or heart issues.

• Some are offering policies without medical underwriting for a limited benefit amount – usually up to $500,000 or $1,000,000 and generally up to age 50.

• That being said, parameds are still being conducted.  Examiners are coming to peoples’ homes but wearing full protective wear.  Before they come, they are now asking several questions about COVID-19 including do you have it, have you had symptoms in the past 14 days, have you done any international travel in the past month and finally, are you ok if I come to your house?

Some people are considering lowering their limits because they are not driving as much.  Is this a good idea?

• Absolutely not.  First of all, this really won’t save you a lot of money.  The difference between having a $100,000 limit and a $50,000 is not half of your premium.  This is only one part of your premium may only save you $100 for the year or about $8 a month.  So if you are not driving very much for two months, it may only save you $15 – $20.

• You are still driving sometimes – to the grocery store or pharmacy or to get take out from a local restaurant.  So you could still have an accident and open yourself up to that exposure.

• Carriers are giving you a discount on your premium already so you will be getting that $15-$20 or more without doing anything.

• If you want to save money and especially if you don’t have a loan on your car, you could drop collision coverage which pays to repair or replace your vehicle if you have a claim.  You would still have some risk because you drive occasionally but not nearly what it would be for droping your liability limit.

• I don’t love the idea of dropping collision completely and if you have a loan on your car, you can’t do that.  So the other alternative would be to increase your collision deductible.  Lenders generally let you increase it to $1,000 or maybe $2,000.  If you don’t have a loan and want to keep collision coverage, you could increase it even higher.  That will save you some money without sacrificing coverage.