As the nationwide restrictions related to the outbreak of COVID-19, commonly known as the coronavirus, move further into their second month, families across the country are feeling the pinch. With unprecedented numbers of people staying home and not working due to the federal and statewide guidelines, many groups are pushing for financial relief.
The most obvious form of this is the pending stimulus plan passed recently by Congress and signed by the President. The recently passed plan equates to $2.2 billion of financial relief, but some states are doing more. For example, California’s insurance commission has ordered insurance companies to refund premiums to affected individuals and businesses.
The Insurace Commission’s Order
The order applies to six different kinds of insurance: personal auto insurance, commercial auto insurance, worker’s comp, commercial multi-peril, commercial liability and medical malpractice. Companies look at facing extensions to other kinds of policies in the future. Insurance companies are required at minimum to return the premium payments that were made during the months of March and April, with the likely possibility of including payments made in Some people pose that these companies may as well, depending on the state of the stay at home orders at this point.
The rationale behind the order is that individuals and businesses, because of the Quarantine, are not driving or working nearly as much, and therefore pose less risk of an accident that would require an insurance claim. Therefore, the state has ordered the companies to reimburse their clients for a risk that they did not really take. Companies must return the premiums no later than August.
Several insurance companies, especially the national ones with recognizable names, have already given various forms of relief, but this makes the refunds mandatory on a state level. It remains to be seen how the premium refunds and other discounts previously offered will interact with one another.
The Hope of Relief
Obviously, the main hope of this order is to provide an infusion of cash to those who are unable to work at this point. The economy has the potential to become an even bigger danger than the virus itself, and the states are understandably concerned. With less bills coming due each month – many student loan and mortgage companies are also providing interest-free deferment – the hope is that the populace will be in much better financial shape than otherwise. But much of this depends on how long the quarantine itself will last.
It may take more than refunded premiums to help those in dire straits. Before long, the call may come for more drastic measures to be taken, and it is not impossible to consider pushback from companies and individuals as well if the restrictions are in place for too long.
Sources:
http://www.insurance.ca.gov/0400-news/0100-press-releases/2020/release038-2020.cfm