Auto Liability Insurance Amidst the COVID-19 Pandemic

COVID-19 pandemic is changing our driving habits. What do these changes mean for your automobile liability insurance?

This blog post can also be found on our Coronavirus Resource Center.

It seems that every day brings new information on the ways the COVID-19 pandemic is changing our lives. Our driving habits are on the list of those changes. While many workers have been sheltering in place—and therefore spending much less time behind the wheelothers are on the road more than ever. The latter category includes employees and entrepreneurs who are delivering meals and goods to meet the needs of their home-bound clientele.

What do these changes mean for your commercial automobile liability insurance, and what can you do to make sure your business is adequately covered during these unprecedented times? We offer four things you need to know about your commercial auto liability insurance that are particularly important as we deal with the impacts of the novel coronavirus.

Car driving down road as sun shines

1. Know your coverage.

We recommend that you review your coverage every year, but if your current business situation is different or you anticipate changes in the near future, that timeframe may need to be sooner. Is your fleet idled due to the outbreak? Your insurance carrier may be offering a lower rate or a payback to reflect your lower risk.

For instance, on April 13th, California Insurance Commissioner Ricardo Lara announced that insurance companies must return, credit, and/or reduce insurance premiums paid in the months of March and April in lines of coverage where risks have fallen substantially due to the pandemic, saying, "With Californians driving fewer miles and many businesses closed due to the COVID-19 emergency, consumers need relief from premiums that no longer reflect their present-day risk of accident or loss."

In the initial bulletin, Lara called on insurance companies to provide policyholders with a 60-day grace period to pay premiums but on May 15, Lara extended the grace period for an additional 60 days and added the month of May to the premium reduction. At the conclusion of this extension, insurers are "encouraged to work with individual policyholders."

Check with your broker to find out what you can expect in the way of premium relief.

Also, if your auto policy period is ending soon, you might be tempted to lower your coverage or remove vehicles. However, we recommend that you maintain your full automobile insurance policy. Since all but two states require auto insurance, your drivers may not be able to hit the road legally when your business gets back up and running again.

2. Identify your driving risks.

Are your employees driving more than they did before the pandemic? Let's say you have added a new delivery service to your restaurant. While that is a great way to expand your business by meeting the needs of your customers during this health crisis, it does increase your risk. Here's why.

Although there are fewer cars on the road, studies show that many drivers are ignoring speed limits. A May 11th Washington Post article reports that average traffic speeds have more than doubled in some US cities. With drivers routinely hitting 100 mph or more on their speedometers, highway fatalities are increasing. For example, in the first 45 days after Minnesota's stay-at-home order, 42 people died in traffic accidents. During the same period last year, there were 29 traffic deaths.

In some of the nation's most congested areas, traffic speeds have jumped by as much as 250%, according to the transportation-data firm Inrix. Yet, while nationwide traffic has decreased 41% from pre-pandemic figures, traffic accidents have dropped by only 21%.

Data indicates that an increase in speeding has not only occurred on the nation's highways but on our neighborhood streets as well. That means your delivery drivers may be at a higher risk, even if they are working within a close radius of your shop.

Speaking of those employees, they may be putting your business at risk if they do not carry sufficient coverage on their personal vehicles. If you recently expanded into delivery to serve customers during the pandemic, you may be allowing your staff to use their own cars. You may even have hired new employees just as delivery drivers. The problem is that many drivers carry only the minimum liability insurance that their state allows.

Delivery drivers have two options to lower their—and your—risk if they have a car accident on the job. They can obtain a business-use endorsement or add-on to their personal auto insurance. Some insurance companies are offering automatic coverage for delivery drivers who use their personal cars for business purposes. Talk with your drivers about what coverage they already have and how you can keep them on the job while keeping the risks low. Business insurers expect that you monitor the employees' personal insurance coverage for the appropriate limits and to assure that it is current.

Driver selection is another way to manage your risk. Here are some questions to consider.

  • How do you hire drivers?
  • Do you run Motor Vehicle Records (MVRs) on your drivers?
  • Do you review those records annually?
  • What happens if a driver has too many moving violations or distracted driving citations?

Insurers monitor this information closely as driving record is an indicator of the potential for an accident.

A third option for business owners is to opt-out of having your staff make deliveries altogether by using delivery services.

3. Educate your employees about responsible driving.

A study released on May 7th by Zendrive, a data analytics company, found that drivers are using their phones more while driving and braking harder. Using data based on smartphone sensors, the study, titled "Mobility Amidst Lockdown: Every Minute on the Road is Riskier," found that speeding has increased by an average of 27% and hard braking is up by 25%. The report states that phone usage by motorists has risen steadily during the pandemic and was up by 38% by mid-April.

According to the Zendrive report, speeding and distracted driving have contributed to a 20% rise in collisions per million miles traveled since the start of the nationwide shutdowns in March. "The data shows our anxiety over social distancing and growing attachment to screens has carried over into our driving behaviors," the report states.

What can you do to mitigate your risk? Educating your employees on the dangers of distracted driving should be at the top of the list. You may have employees searching for customers' addresses and checking their GPS while they are driving. Explain to them the importance of planning their route ahead of time and of pulling over when they need to check the map on their phone. Try to determine if fatigue and stress could be causing them to make poor driving decisions.

Reinforce your discussions with your drivers by requiring them to take a Distracted Driving Course. Ask your broker about these valuable video resources that are often available from your insurer at no additional charge.

4. Use analytics to monitor how your employees drive.

After educating your employees on the dangers of distracted driving, another way to lower your liability is by using analytics to monitor their driving habits. New technologies are continuing to emerge that allow you to follow fuel usage, hours and amount of time spent on the road, speed, and braking intensity. By monitoring these reports, you can both decrease costs and increase safety.

Many fleet owners have been successfully using analytics along with driver coaching and cameras for more than a decade. The data can help employers know about potentially dangerous situations. Other options include cell phone apps that automatically hold calls, texts, and emails whenever a driver's smartphone is inside a moving vehicle.

There are privacy issues surrounding the use of apps and other emerging analytics. Consult your HR department and/or legal counsel to assure you are in compliance as you integrate these tools.

Investing in new technology may seem like a cost you don't want to take on right now. However, they may more than pay for themselves in the long run in terms of fewer accidents and reduced insurance cost. Also, discuss with your broker how your rates might be affected by using this technology in your business.

The Impact of COVID-19 on Auto Liability Insurance

Before the COVID-19 pandemic, the average American worker commuted about 16 miles each way to work, and the average commute was about 27 minutes long, according to the U.S. Census Bureau. Nearly 10 million of us had a commute time of more than an hour each way, and another 600,000 traveled 90 minutes each way.

Many experts feel that Americans will never fully return to these pre-COVID numbers. As our economy continues to open up, they predict we will embrace new ways to combine our in-office work with work-at-home. Our "new normal" will see the auto insurance industry continue to adapt in order to meet the demands of customers in this challenging marketplace.

We encourage you to contact your broker now to discuss any of these auto insurance needs:

  • Add or remove drivers from your policy
  • Change coverage limits or amounts
  • Add out-of-state required coverage if necessary
  • Determine if you qualify for any discounts or refunds
  • Discuss changes or expected changes in auto operations
  • Discuss auto personal use and vehicle safety policies


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