COVID-19 – Car Accidents & Insurance Premiums

Since about mid-March 2020 Canadians have been spending less time on the roads due to the physical distancing restrictions the Federal and Provincial governments have outlined for us. Many people are working from home and getting their errands done online, so that they can limit the amount of physical contact they have with others, and consequently, the number of car accidents is on the decline.

What Does Fewer Car Accidents Mean?

With less cars, and fewer accidents and claims a number of different auto insurers have committed to decreasing their premiums their insureds are paying because they are working from home and generally driving less. 

For example, Aviva, one of the largest insurance companies in the country has committed to offering $100 million in relief measures for drivers who are self-isolating at home. They have indicated that customers who have stopped driving completely will receive up to a 75% discount on their monthly premiums.

Insurers like Allstate, Pembridge and Pafco (all subsidiaries of the same parent company) have committed to a one-time payment to qualifying customers in May 2020 in the amount of 25% of their customers’ monthly premiums. The cumulative payments made to customers are expected to add up to approximately $30 million. Allstate has acknowledged that there are going to be less drivers on the road in April and into May. Drivers should not have to pay these usual premiums when they aren’t driving is not fair. “We recognize that with fewer people driving, there are fewer collisions on our roads,” he said. “As a result we are giving … back to our customers. It’s simply the right thing to do.”

Desjardins, a Montreal-based insurer, said it would offer refunds to those who have stopped driving completely because they’ve been laid off or are self-isolating. 

What the Insurance Bureau of Canada has Confirmed

The Insurance Bureau of Canada (IBC) has already confirmed that thousands of Canadians have had their premiums deferred for a number of months in order to help with their financial constraints as a result of COVID-19. Over 1 million Canadians have lost their jobs since the outbreak.

The IBC has also confirmed that people’s premiums will be adjusted based on their current driving habits.

Experts say the insurance rebates or discounts will likely have minimal effect on the insurance companies as there are significantly less payouts due to mishaps in the last month. The expectation is that April and May will also have less payouts as there will be less claims.

In the Coming Months

As summer comes and goes the Federal and Provincial governments are expected to relax social distancing rules over time. People will be allowed to go back to work. As more time passes restaurants and other public establishments are expected to open too. As the economy opens people will start to drive again. People will move around and therefore more accidents are likely to happen. This is when we can expect insurance companies to end the rebates and discounts. 

The Goal of this Effort

The move to temporarily reduce premiums to those who are out of work or self-isolating is welcomed. This comes at a time when governments are doing whatever they can to help Canadians keep money in their pockets during the recession. The insurance industry has taken similar steps to help Canadians in time of need.