At Park Insurance, we’re always helping our clients prepare for a ‘worse-case scenario’ by providing them with insurance packages tailored to their exact specifications. But even we didn’t see how dramatically Covid-19 would impact quite literally everyone in the country, from homeowners and landlords, to businesses, motorists, and the self-employed. It’s a terrifying time for everyone, and we all have to shift our priorities to cope during this national emergency.
However, one thing that shouldn’t drop off your essential list of things to do is keep your insurance up to date. That’s why we’re encouraging you to make sure you renew your insurance as and when it comes up, rather than assuming that you’ll be automatically granted an extension to your existing policy.
For the last few weeks there have been indications that insurance policy renewals, whether that’s for vehicles, home and contents insurance, or business cover, might be postponed to flatten out the financial curve for clients. The discussion within the insurance industry was that by postponing renewals and allowing coverage to simply continue uninterrupted (much like the six-month extension on vehicle MOTs, for example), that we could all move onto the next phase of the crisis and defer any renewals for anything up to six months.
However, after further examination, at Park Insurance we’ve joined with other brokers in strongly recommending against this course of action to our clients.
The current situation is incredibly fast-moving and fluid, and as we still don’t know when things will get back to some semblance of normality. To normalise at least one aspect of your finances, we believe that you should renew your insurance policy on its due date. This will avoid a delayed impact on you or your business further down the line.
As we said, this is a very fast-moving situation, which means that it could come to a conclusion sooner than expected. If that is the case (which we all hope happens), then those extensions could come due very suddenly, when business funds are at their lowest point as a result of the current lockdown.
You also need to be aware that the vast majority of insurance brokers are still working relatively normally, so they are there to deal with renewals. Put simply, ring our offices and your phone call will be answered.
Premiums could go up
Insurance brokers are also concerned that the resulting financial slump will cause providers to increase the cost of insurance cover further down the line. This is especially true if there is an unprecedented volume of claims for business interruption or loss of earnings, especially among business clients.
To shield yourself from the inevitable increase in premiums (at least in the short term), our advice is to renew now while the premiums are lower. This will mean that your insurance will have less of an impact on your finances later on, when every penny will count.
Insurance providers are extending some cover, but only in limited areas and even then not for everyone. Rather than finding out that your insurance cover has not been extended and that you can’t claim for loss of earnings, for example, it’s far better to renew now and be absolutely certain that you have the right level of cover to protect you if the emergency goes on for longer than expected.
The impact on the insurance industry
While the impact of the emergency on individuals and their businesses is devastating, it also affects the insurance industry itself. All insurance providers invest in the financial markets, and currently the markets are seeing an extraordinary drop in the value of stock the likes of which have not seen since the Great Depression of the 1930s. Bearing in mind that we are only at the start of this situation, it’s safe to assume that any kind of market recovery will be a long time coming.
That, in turn, affects the values of the insurance providers’ portfolios, especially when they are already massively exposed to financial claims from their clients. This again will equate into higher premiums for everyone in four or six months, when you can guarantee that providers will be pushing hard for rate rises.
So while if you are in immediate financial difficulties as a result of Covid-19 then you may be able to ask for an extension to your cover, our advice is if you can renew on your due date, then do so. It will give you a solid year’s protection financially, which could make a big difference in six to eight months, when we anticipate that the financial fallout of Covid-19 will really start to take effect.
If you have any concerns, your policy is due for renewal, or you’re struggling to meet your premiums then don’t push it to the back of the ‘to-do’ list – call us. Our brokers are here and ready to help answer your questions, provide reassurance, and help all of our clients get through this difficult time.