Most major auto insurers are offering refunds on auto insurance due to the novel coronavirus and the ensuing shutdown of the economy. Some offer as much as a 25% refund on premiums, while most others provide 15% refunds for premiums during April and May.
Due to mandated or encouraged Covid-19 shutdowns, people are staying at home and working from home (so not commuting to work). Children are staying home from school (so parents aren’t ferrying their kids to and from school). It stands to reason that with fewer people on the road and less vehicle usage, there is less of a chance for crashes. Thus, insurers anticipate paying fewer claims totaling less money than before.
While these savings do add up, don’t get greedy and cancel your insurance. We’ll tell you why — just keep reading.
You and your spouse work from home, and your children are attending school virtually, so why not just cancel the policy for a few months?
Don’t do it!
Auto insurers view consumers going “naked” without coverage as a risk factor. Consequently, when you do reinstate your insurance in a few months, your premiums will likely increase by as much as 10% or more.
Another reason not to cancel your auto insurance is that you need the coverage if your vehicle gets stolen or is hit while parked (theft will increase with more people in desperate straits financially, and people drive more recklessly with fewer cars on the roads). Theft is typically covered by the comprehensive coverage under your policy, as is storm damage. If you have cancelled your policy and your car sustains hail damage, you could be paying thousands of dollars yourself.
The terms of your lease require you to maintain full coverage at a specific limit, usually state minimum limits.
One way to save a little money is to cancel parts of your policy you might not need for a while, like roadside assistance or travel coverage.
Now you have just offered an even better reason not to cancel your policy!
If you cancel your policy, you have no Uninsured Motorist (UM) or Underinsured Motorist (UIM) coverage. You also have no PIP or Medical Payments coverage. You may need this coverage, even if you don’t drive.
Let’s say you catch a ride to the store from your neighbor who has a 1984 Yugo without insurance. She crashes into a parked car because her coronavirus mask blocked her vision. Your serious injuries might be your responsibility. If you keep your policy in place, you have both medical coverage and UM coverage. If she has coverage but in very low limits, you would have access to UIM in amounts in excess of her policy.
Or, suppose you are walking and get struck by an Uber driver who is not logged into the app, does not have a passenger, and is not en route to a passenger. In that case, the driver’s private carrier might decline coverage due to the use of his vehicle for a commercial purpose, and the Uber insurance would not cover him because he did not have a passenger and was not operating logged into the app. If you keep your own coverage active, you have access to medical and Uninsured Motorist coverage.
One more thing: If you have a dog, keep that homeowners policy alive just in case Rover bites your neighbor or the mail carrier.
My recommendation is that you should never cancel your auto or homeowners policies unless you have no economic alternative.
As in all cases involving injury and potential liability, if you have been hit by a vehicle immediately get medical treatment, report the crash to police and your own insurance company, and contact a lawyer with expertise in your type of case, such as bicycle accidents or pedestrians hit by cars.
If you've been in an accident and have questions, contact Chicago personal injury attorney Stephen L. Hoffman for a free consultation at (773) 944-9737. Stephen has nearly 30 years of legal experience and has collected millions of dollars for his clients. He is listed as a SuperLawyer, has a 10.0 rating on Avvo, and is BBB A+ accredited. He is also an Executive Level Member of the Lincoln Square Ravenswood Chamber of Commerce.
Stephen handles personal injury claims on a contingency fee basis, which means you don’t pay anything upfront and he only gets paid if you do. Don’t wait another day, contact Stephen now.