The COVID-19 health crisis has affected every aspect of daily life. States like New Jersey did not begin reopening businesses on any major scale until the number of cases went down, adequate testing was in place, contact tracing occurred, and other safety precautions were implemented. The shut-down orders and limited business and personal activity meant fewer people were driving on New Jersey’s highways and roads. So much so, that many people were posting pictures of empty streets or roads that have even been overtaken by deer and other animals.
As a result of a stay-at-home order by NJ Governor Phil Murphy, most businesses were closed for nearly three months, with the exception of essential services. At both the federal and state level, programs have been enacted and orders issued to help residents with the severe economic consequences of these shutdowns. In New Jersey, Governor Murphy, on April 9, 2020, issued an order extending grace periods for certain insurance payments. During the grace period, insurers couldn’t cancel policies for failure to pay the insurance premiums.
The grace period for auto insurance is 90 days, which means it is due to expire on July 9. But the economy is not back in full swing even now, and a new wave of cases is starting to make its way through the country. There are still a lot of people who aren’t back at work, or who are working reduced hours, and are therefore driving less than they were before the shutdown this March.
Certain fees, interest, and other charges related to delayed payments should continue to be waived. Auto insurance companies are required to pay valid insurance claims even if the premiums aren’t up to date during the grace period. Any payments due when the grace period expires can be spread out through the remaining term of the policy or up to 12 months.
Less traffic should mean lower premiums
While a grace period was of some help, public pressure mounted on auto insurance companies to reduce their premiums during the COVID-19 crisis. Even with the state reopening, it would be prudent for insurance companies to continue issuing rebates, refund checks, or credits on accounts with auto-draft due to the continued decrease in traffic volume on New Jersey’s roads.
If there are fewer cars on the road, then the risk of auto accidents is reduced proportionately which means insurance premiums should be reduced proportionately (after some consideration for administrative costs).
Some, but not all, car insurance companies are offering refunds or rebates due to the lower risk of accidents. Allstate, Geico, and USAA, have begun giving 15% rebates and adjusting the payment and cancellation terms.
The question begs, though: If the risk of an accident is reduced by 50% because half as many cars are on the road (as Consumer Reports asserts), then shouldn’t car insurance companies be offering much larger rebates? Shouldn’t these auto insurers also reduce the premiums that are due each and every month of the pandemic?
Dan Karr, founder and CEO of ValChoice, a service that rates insurance companies, states that auto insurers could save as much as $100 billion due to fewer claims because of fewer accidents.
Insurance steps car owners should be considering now
Car owners need to review their current insurance needs during this crisis.
- There are still minimum insurance requirements that must be met.
- As workers are working from home, they should review any policies that are based on travel to an office or any place of business.
- If policies are based on the number of miles a person drives each day or each week or month, inquiries should be made about whether those policies should be changed to reflect a much lower mileage usage.
- Drivers should still consider having as much bodily injury insurance and UM/UIM insurance as possible.
At Eichen Crutchlow Zaslow, LLP, our experienced New Jersey car accident lawyers have obtained numerous multi-million and many six-figure settlements and verdicts for our personal injury clients. We fight to hold drivers, car owners, and any other responsible parties liable for the injuries and deaths they cause. We demand that insurance companies pay for your pain and suffering, medical bills, lost income, and property damage. To speak with a tough car accident lawyer at one of our offices in Edison, Red Bank, or Toms River office, call us now at 732-777-0100 or fill out our contact form.