By Kevin Komar
By now you are probably feeling the pinch and feeling a little unsecure about your short-term finances and particularly worried paying for automobile insurance for a car you may not even be using. This is particularly true for small business owners. Why pay for insurance on something you are not using at all especially if you cannot afford it right now?
The State of Michigan's Director of the Department of Insurance and Financial Services ("DIFS") has issued a Bulletin on April 13, 2020 addressing this exact scenario asking insurance carriers to be "flexible" regarding the payment of auto insurance premiums. The director has asked that carriers allow for a 60-day "grace period" to pay for past due insurance premiums before cancelling coverage. The director is also asking the insurance carriers consider waiving fees for late payments, allow people to suspend certain types of coverage without losing coverage, or consider different payment plans. This flexibility is a good thing but here are somethings that might help you save from trouble during this crunch in the long run.
1. Do not automatically assume that your insurance company will be "flexible" as requested by the insurance commissioner as this recommendation by the State of Michigan is not an order that the insurance company must follow. You should find out first if your insurance company is even willing to be "flexible" regarding payment of premiums before you do not pay. If you do not pay the premium, your carrier might still cancel your policy. I've received a notice from my carrier where they are refunding a portion of my premium and it is willing to work with its insureds on payment options but not all carriers are going to do this. Insurance carriers often use lack of payment for a premium to automatically cancel coverage and you cannot drive your uninsured car lawfully in the state of Michigan, thus you need to find out if your carrier is even willing to do this before you do not pay your premium.
2. Get any form of "flexible" treatment regarding your premium payments you can get from your carrier in writing or email confirmation from that carrier before you do not pay. A verbal agreement during a phone call is worth the paper its printed on. If you were involved in an auto accident during the pandemic and you did not pay your premium or even the full amount of the premium, the insurance carrier could claim your failure to pay entitled the carrier to cancel your policy. But if you have something in writing from your carrier, it will help you avoid the trouble of your carrier claiming your policy is cancelled for non-payment.
3. Many people are dropping their auto insurance coverage for the time being on a vehicle or changing their coverage because they are not driving as much. If you do go this route, be sure to contact your carrier as soon as things start to go back to normal for you. I can already see situations six months from now when Michiganders are back to work but people forget the add a vehicle back to their policy or they forget to tell their carrier that they are once again commuting to work. This can get you into trouble because an insurance carrier will not pay benefits for you if you are driving the car without any insurance coverage. An insurance company might also refuse to pay benefits because it will claim you committed insurance fraud when you started commuting again to work without telling them. Do not assume they will know when you go back to work and that they will adjust your premium and coverage automatically.
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Kevin Komar is an attorney with Sinas Dramis in Lansing.
Published: Fri, May 01, 2020
