Due to the economic disruption caused by the Coronavirus, we wanted to bring to your attention two ways you can immediately improve cash flow and reduce your overall insurance premiums in the coming months by being aware of various insurance premium relief options.
Payment Relief from Insurance Carriers
On Friday, March 20, the California Insurance Commissioner requested all insurance carriers provide premium payment relief for up to 60 days. Most insurance carriers have responded and are suspending notices of cancellation for one pay period on either a case by case basis or automatically to all clients. All insurance carriers, and even premium financing companies, are expected to offer payment relief in some way.
We recommend you contact your insurance carrier or finance company’s billing department directly to understand their payment relief options and request relief terms, if required. You can find the carrier billing number on your monthly invoice. Be sure to have your policy number ready when you call. If you need assistance, please contact your account manager.
Lowering Your Revenue and Payroll Estimates on Insurance Policies
Unfortunately, most company’s revenue and payroll have been significantly impacted in the past several weeks. In the near and medium-term, when the shelter-at-home orders will be lifted and when consumer spending will return to pre-coronavirus levels are uncertain.
Two insurance policies, General Liability and Worker’s Compensation are typically based on revenue and payroll levels at policy inception. And most insurance carriers will allow a company to revise estimates mid-term, resulting in lower premium payments, on a pro-rata basis, for the remainder of the policy term.
As you recast your financial projections to account for the current environment, be sure to contact us with your new revenue and payroll estimates so we can adjust the policies that rely on this data to calculate your insurance premium. (For those clients utilizing the Pay-As-You-Go option for Worker’s Compensation insurance, your premiums will already match your actual payroll.)
After adjusting your revenue and payroll, future payments will be adjusted downward to match the lower exposure estimates providing additional cash flow in the coming months.
Additional Options for Insurance Premium Relief
Other policies also offer additional areas to reduce premiums, however, a conversation with us will be required to ensure proper coverage is still in place and vendor contracts are still being met. These areas include:
- Reduced revenues may allow the business interruption coverage on your property policy to be reduced.
- Deductibles can be increased or coverage levels can be reduced.
- Elimination of policies where there is no longer exposure.
There are several areas where we can assist with payment relief and help improve cash flow. Be sure to reach out to your account manager for assistance. We are here to help as we all attempt to navigate this uncharted territory.
Milestone Risk Management