Canadian auto insurance providers are taking two different routes to deliver back to consumers their claims cost reductions – a result of the overall decline in vehicle use during the COVID-19 pandemic.

The Insurance Bureau of Canada, a national agency that represents home and auto insurance, trumpeted a potential $600 million in savings to consumers in early April. Most notable was a pledge to reduce or rebate premiums to compensate policyholders who are working from home, or self-isolating.

However the cost savings are not being automatically applied by all firms. Some firms are providing blanket reductions to all customers, while others only offer the savings to customers who inform insurers of COVID-related changes to driving habits. In the latter case, the amounts being rebated are essentially savings to which consumers were already entitled under their existing policies.

Auto insurance weighs many factors, most importantly the value of the car being insured and the risk profile of drivers. Premiums are based also on how the car is used, including whether that’s to commute to work. COVID-19 has changed the way many Canadians work and how their vehicles are used. Fewer vehicles on the road results in fewer accidents and fewer claims.

Some insurers will automatically rebate consumers an amount based on the expected overall reduction in use, whether use has changed or not. This would be most advantageous to those who continue to use their vehicle for work. Some examples:

• Allstate Insurance announced a one-time payment of about 25% of a single monthly payment to policyholders as of April 8, a $30-million measure.
• Quebec-based La Capitale Insurance and L’Unique General Insurance announced 20 per cent monthly premium reductions, and L’Unique COO Yves Gagnon said lower premiums for all vehicles regardless of use would ensure that essential workers would benefit. “We don’t think it would be fair if those who are saving lives or are working so that our society continues to function didn’t benefit from this rebate as well.”

Other insurers, however, have simply publicized that consumers should contact them if their work-related driving patterns have changed – a provision already in most policies. Some examples from leading insurers:

• Wawanesa Insurance asks consumers to contact their broker if vehicle use has changed, as part of “options to save policyholders $40 million”.
• Intact Insurance customers should expect a 15% reduction on average for three months when they inform their broker or complete an online form.
• Aviva offers few details about any consumer relief, but does provide free roadside assistance for all first responders and healthcare workers.
• TD Insurance publicized that premium adjustments may be made for eligible customers. It offered up to 90 days of premium payment deferral, but has not published amounts or total value of savings.

Insurance industry website canadianunderwriter.ca has more details of the pledges of leading insurers, but consumers should also contact their insurer for additional details.

Almost all insurers offered other forms of COVID-19 relief according to the IBC release and other press releases. NSF fees are temporarily waived. Coverage will not be terminated for non-payment, effectively allowing consumers to defer premium payments. Most insurers have offered additional home coverage at no additional cost for people working from home. Consumers who use their cars differently during the crisis (commuting to avoid public transit, or delivering food to others) would not face increases to premiums or their ability to make a claim.

IBC representatives could not elaborate on how the industry’s $600 million total savings are split among the different relief elements. In an email exchange, IBC Director of External Communications Steve Kee acknowledged that different members have taken different approaches. “Each approach is different but nonetheless, meaningful to customers,” Kee wrote. “Insurers are making choices based on what’s best for their customers and how best to get money out the door and into their customer’s pockets.”