When the lockdowns started and everyone was working from home, many insurance companies stepped up with options to ease the stress.
Some insurance companies offered deferred premium payments for April and May. The deferments were an attempt to help business lower their expenses during the height of the pandemic when most businesses were hit the hardest. With the anticipated loss of income, many insurance companies took action to ease the financial burden on businesses.
In some states, an insurer could not charge any late fees or report the policyholder to a credit reporting agency due to late payments that were a result of financial hardship due to the COVID-19 pandemic.
Now that it’s June, what does that mean for businesses, especially those who have yet to reopen?
June Is Busting Out All Over
The terms of many deferments include resuming payments as of June 1. However, in New York, Governor Cuomo has again extended an order that prohibits insurance carriers from terminating some policies. The order also requires insurance carriers to be lenient to those hit financially by the COVID-19 Pandemic. This order will now remain in place until June 28th.
Many commercial and personal auto insurance carriers are offering refunds for May and June. These credits can be in the form of a refund check or be applied to a future invoice, depending upon the carrier.
For many insurance carriers, June is also the end of the suspension of late fees and cancellations for non-payment. This could have a huge impact on businesses that are still struggling to cover monthly expenses. Businesses experiencing financial hardships should contact their insurance agent to discuss their situation. Concessions may be available on a case-by-case basis.
New Ways to Save
Businesses who did not take advantage of deferring their April payment may be able to defer their June payment instead. The ruling in NYS is “small businesses experiencing financial hardship due to COVID-19 may defer paying premiums for property and casualty insurance for 60 days.” [//www.dfs.ny.gov/consumers/coronavirus]
Another installment plan option some insurance carriers are offering is for paying the amount deferred. Instead of paying those premiums in one lump sum, businesses can spread that amount over the next 12 months of payments. This would minimally increase the monthly payments and for some businesses, would make it more manageable than having to come up with the funds right now.
Business who have downsized during the pandemic should revisit their insurance coverages, especially those directly related to the size of the workforce. If there was a reduction in payroll and/or diminished sales revenue, there may be an opportunity for reduced coverage and lower premiums.
If the business model or operation has changed and will remain changed, perhaps the insurance classification can be updated to one that is less expensive. One example is a retail store that shifted to e-commerce.
Business Insurance Breakdown
There are several types of business insurance that were affected by payment deferments. These include:
- General Liability
- Error and Omissions
- Workers’ Comp
- Property Damage
Each of these insurance types, underwriting companies, and governing state of the business need to be reviewed individually to truly understand the effects of deferments. For example, in Ohio, workers’ compensation premium payments have now been deferred to September 1. And click here for some additional location-based information from Liberty Mutual Insurance.
The situation is still changing almost daily. All businesses (and non-profits) should have a full understanding of their coverage and the available options from their insurance carriers. It’s important to take the time and reach out to your insurance agent to get the right information about discounts, deferments, and installment plans in order to make the best decision for your business.