Auto Insurance

What you need to know about insurance and the COVID-19 outbreak

By: Zandile Chiwanza on March 25, 2020
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When it comes to the coronavirus outbreak and insurance, we’ve mostly covered how the pandemic will affect your travel plans. But as we navigate the economic impact of COVID-19 and the financial challenges ahead, we wanted to check what it means for other types of insurance.  

After all, certain insurance can protect you and your loved ones from financial loss or hardship.

According to Global News, more than 500,000 Canadians have applied for Employment Insurance (EI) or financial assistance, compared to 27,000 this time last year.

If you are directly affected by coronavirus because you are sick or quarantined, or caring for someone who is sick or quarantined, you’re eligible for sickness benefits. Keep in mind, you must have worked a certain number of hours in the previous year, depending on where you live to be eligible. The good news is that the usual one-week waiting period and the requirement for a medical certificate to access these benefits have been waived. 

Healthy Canadian workers who are laid off, or face reduced hours as a result of COVID’s impact are eligible for the Government’s new Emergency Support Benefit which will provide up to $900 every two weeks for 15 weeks. 

Starting in April, workers who aren’t typically eligible for EI, such as the self-employed and freelancers, can also apply for the Emergency Care Benefit.  

How coronavirus affects life insurance

When it comes to life insurance, there are no known exclusions related to coronavirus at this moment, said Jeff Bernstein, independent insurance planning specialist and managing partner at Seligman Insurance in an interview.

“If you already own a life insurance policy and you pay the premiums this is treated no differently than any other cause of death,” he said.

Generally speaking, life insurance policies pay out no matter how you die (with the exception of suicide). 

“This pandemic and the public health scare around it may have caused more people to reflect on their plans and needs from a personal finance standpoint,” Bernstein pointed out. 

“It's certainly worth the conversation, but just because there's a pandemic around doesn't mean that all of a sudden we have to buy every insurance that exists.”

If coronavirus was the wake-up call you needed to get your life insurance some insurers will allow you to still go through the entire application without meeting the advisor face-to-face, said Brian So, founder of Brian So Insurance in an interview. 

The underwriting process if your policy requires a medical exam is currently under review so it's best to contact your potential insurer to clarify what their process is at the moment.  

Should you tell your home insurance company you're working from home?

An increasing number of people are working from home to help stop the spread of coronavirus. 

Those numbers are expected to jump in Ontario with the announcement yesterday of the closure of non-essential business for the next two weeks.

“Teleworking and online commerce are permitted at all times for all businesses,” the press release said.

So, if you’re fortunate enough to work from home, does your home insurance provider need to know? 

Well, that depends. If you’re temporarily working from home it’s not mandatory to let your insurer know. Generally speaking, home insurance will cover your personal belongings including some electronics and personal liability, should you be sued for an injury sustained on your property.

However, your standard policy may not be adequate to cover company property, such as expensive equipment that you might use for work. In such cases, it would not hurt to call your provider and check if you need to extend your coverage.

If your type of work requires visitors to the house for purposes related to the business, you should also consider verifying with your provider if there are any endorsements to consider, but you likely won’t (or more accurately, shouldn’t) be receiving any visitors at this time when we’re supposed to be practising social distancing.

According to the Insurance Bureau of Canada (IBC), a home insurance policy offers a small coverage limit for books, tools and instruments necessary for a business, profession or occupation. Therefore, if you operate a small business from your home on a more permanent basis, you should inform your insurance representative and obtain additional coverage to mitigate the risk of a potential loss. 

Should you cancel your auto insurance?

For drivers fortunate to be working from home indefinitely, it might be tempting to park your car and save some money by cancelling your auto insurance. 

There are some things to consider before you do this :

  • If you’re operating a car in Canada, it’s mandatory to have car insurance. 
  • Cancelling your insurance may come with a fee, especially if you’re cancelling before its expiry date.
  • A gap in coverage may result in higher premiums (insurance companies look at this when determining rates). 
  • The penalties for being caught driving without car insurance include a fine, licence suspension of up to a year or having your vehicle impounded.

An alternative option may be to remove your coverages if you’re not driving your car and just have a basic level of insurance. This can help reduce the monthly cost significantly.  Whatever you decide, don’t just stop paying your car insurance, this may result in your insurance company cancelling your policy. 

If you’re facing financial hardship or worried you won’t be able to make your premium payments due to the impact of COVID-19 IBC suggests contacting your insurance representative to discuss a potential solution. 

“Canada’s home, car and business insurers are here for Canadians. We know Canadians are navigating a new world with changes occurring rapidly within our communities and beyond. Insurers are committed to working with Canadians during these uncertain times,” said Don Forgeron, president and CEO, IBC in the press release.