COVID-19 Commercial Insurance FAQs

March 26th, 2020

Smiling, knowledgeable female expert broker with the answers to your FAQs relating to COVID-19 and commercial insurance.
With the quickly-evolving business environment during the COVID-19 crisis, we recognize you are facing new challenges and have questions about your insurance program. We hope this article will help answer some of your COVID-19 commercial insurance frequently asked questions.
We encourage you to reach out to your Account Executive if you have any questions or concerns. Your insurance team can review changes to your company’s operations and provide expert advice on how your insurance program should change as well. Each company’s situation is unique so we recommend a discussion with your Account Executive to make sure your insurance plan follows any changes you have
implemented, meets all contractual obligations and provides the protection you still need during these times.

Can I cancel my commercial insurance?

Yes, commercial insurance can be cancelled at any time. You would receive a refund for premiums paid for the remaining policy term.

Every policy wording is subject to its own cancellation terms, but your Account Executive will outline the cancellation provisions and guide you through the process.

It is important that you are sensitive to contractual agreements and loan commitments. Your business may continue to have exposures for which insurance might continue to be important. Before you decide to cancel your coverage, we encourage you to speak with your Account Executive to ensure you are aware of potential exposures.

Can I get relief on paying my commercial insurance premiums during the COVID-19 crisis?

The decision to allow a deferral of premium payment is made by the insurer company.

At this time, the situation is still evolving. Unfortunately, insurers have not been consistent regarding offering premium payment deferral options. Some insurance companies are offering to work with clients by offering:

  • Payment deferral options (between 7 days and 120 days)
  • Waiving NSF fees
  • Temporarily waiving cancellations for non-payment

However, other insurance companies are not offering any accommodations and are maintaining payment requirements. Insurers, unlike other financial institutions, do not have collateral or assets they can attach to, which makes requests for premium payment deferral difficult for them to manage.

We continue to advocate on behalf of our clients for flexibility with payment terms. We can offer premium payment plans, such as monthly payments. We can also look at options directly from the insurance company or work with specialized premium finance companies. Finance programs are subject to interest or finance fees which vary depending on the amount financed. Payment can be structured over 9-12 months.

Contact your Account Executive if you need to request payment deferral or review your payment options.

Why do I need commercial insurance if my business is not operating during the coronavirus crisis?

You should retain your commercial insurance even if your business is not operating in the event you experience loss or damage to your company’s property, equipment or vehicles. This can happen even if your business is shut down or experiencing a reduction in work. Pipes still burst in buildings, the equipment can overheat and cause fires, and thieves can still break-in. Your business may also have contractual insurance obligations.

Not having adequate commercial insurance will mean your business must use cash to repair any damage. Finding the right balance between insurance premiums and deductibles to offset your cash flow obligations is important. Unfortunately, when times are tough, we typically see an increase in claims.

How can I save money on my commercial insurance during the COVID-19 pandemic?

Premium-saving opportunities will be specific to each insurance policy. Here are some of your options to save money on your commercial insurance during the COVID-19 pandemic:

  • Amending coverage limits
  • Deleting unnecessary coverages
  • Changing type of coverage from “operating” to a “parked or idle” status

There are several factors to consider when looking at amending coverages:

  • Do you have any contractual obligations that include insurance provisions on your buildings, equipment or stock?

Mortgages, loans and leasees typically have insurance obligations that must be met. Before coverage is amended it is important to review the contract terms. Changes to the insurance program may require changes to the lending terms.

  • Do you lease or finance your company vehicles?

Vehicle leases and financing programs commonly have specific insurance coverage requirements. Prior to parking units that are not being driven and deleting liability or collision coverage, make sure the lender consents to remove coverage. Also, it is important to ensure these units are not parked or sitting idle on government roads (as they are required to have liability coverage if this is the case).

  • Are you a tenant in a leased or rented space?

Tenants in leased or rented space likely have a lease agreement with their landlord. The lease will likely contain insurance provisions for the tenant. It is important to review your lease obligations and seek approval from the landlord prior to making any changes.

  • Do you have contractual or job-specific insurance requirements?

ISNET World, Comply Works and other contractual or job-specific insurance requirements may apply. Have you agreed to have insurance in place for specific clients or jobs? Will customers or vendors require specific coverages before you can attend a job site or ship your product? Ensure you review your contractual insurance requirements before changing your coverage.

  • Do you have a franchise agreement requiring insurance to be in place?

Franchise agreements have specific clauses requiring insurance to be in place. Any changes to your insurance typically need to be approved by the Franchisor.

  • Do you have Certificates of Insurance issued to customers that require these for their own contractual obligations?

Please be mindful that Certificates of Insurance typically have a 30-days notice clause related to making any material changes.

If my building is now vacant or temporarily unoccupied, should I be aware of any risks?

If your building is now vacant or temporarily unoccupied, there is increased exposure to vandalism, theft, water damage and fire.

Most insurance policies allow for 30 days of vacancy before your insurance company must be notified. Once notified, the insurance underwriter provides approval that coverage remains as is or the policy must be revised to include a “Vacancy Permit.” If you are going to leave your premises vacant, please contact your Account Executive immediately.

Here are some tips to help protect your vacant or temporarily unoccupied business:

  • Have the building checked at least twice a day, once in the morning and once in the evening. We suggest that all visits are logged.
  • Shut off water at the water main. This may cause additional complexities with sprinkler systems that are intended to mitigate and reduce significant damage due to fire. Discuss this with your Account Executive first.
  • Arm your alarm systems.
  • Maintain a normal level of exterior and interior lighting.
  • If possible, have a minimum of one vehicle on-site to create the appearance someone is in the building. You may want to reposition the vehicle periodically.
  • Ensure that the heat is on and operational.

Is our Workers Compensation Benefits coverage affected by COVID-19?

If your business has WCB coverage for your employees, you should connect and inquire about credit or reduced premiums due to your reduced workforce.

 

These FAQs are generalizations and not meant to be definitive to every situation. Your needs are unique and should be discussed in detail with your Account Executive.

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