Tags: Coronavirus | covid 19 | insurance | life | auto | health

How COVID-19 Has Affected Your Life, Auto and Health Insurance

How COVID-19 Has Affected Your Life, Auto and Health Insurance
(Alain Lacroix/Dreamstime)

By    |   Friday, 12 June 2020 02:34 PM

People may debate whether or not this pandemic could have been foreseen, but in most areas of the insurance industry, they saw it coming 18 years ago.

That is because, following the SARS epidemic in 2002, nearly every line of insurance coverage began writing in clauses that excluded pandemics and infectious disease causes, protecting many insurers from having to pay out claims in a time like this.

That doesn’t mean the insurance industry has been unaffected, though. From auto insurance companies offering refunds to idled drivers, to business insurers fending off lawsuits challenging their exclusions, to life insurers finding new ways to underwrite their policies, COVID-19 has rocked nearly every part of the insurance world.

In this report, we will detail many of the ways the insurance world has been affected by COVID-19, and in turn, how it is responding.

Health Insurance

With people falling ill by the hundreds of thousands, attention immediately goes to the front-line insurance product — health insurance.

The good news is if you already had health coverage through your employer, or through a state health insurance marketplace, or even through Medicaid or Medicare before the Coronavirus pandemic began, you likely won’t see many changes to your health insurance post-pandemic. That is because the rules for treating people afflicted with COVID-19 remain the same as they do for treating any other viral infection.

Since the passage of the Affordable Care Act in 2010, all health insurance policies now cover treatment for pre-existing conditions. And coverage can’t be terminated because of a change in someone’s health status – such as through contracting COVID-19.

The changes in health insurance from today’s pandemic come if someone has lost their employer-based health plan because they were laid off or had their hours reduced. In that case, a special enrollment period is opening up for the state-run Affordable Care Act marketplace-based plans. That means that people who find themselves newly lacking health insurance can now quickly apply for a new health plan under the marketplace, and if they are a little lucky and very careful, they may not even have a gap in coverage.

In many cases, such as when the family income takes a hit, those people may also qualify for additional marketplace subsidies to help pay for that health insurance. All they need to do is update their marketplace application with their new income to see if they are eligible for a price reduction or an increased subsidy.

In most cases with marketplace-based policies, coverage begins the first of the month after someone enrolls. If someone anticipates losing their job, they can even apply before the job officially ends to try and ensure there are no gaps in coverage. But, if that isn’t possible, they can always purchase COBRA coverage from their employer to cover any gaps that might emerge, though that tends to be a pricy option, especially for newly unemployed people.

Auto Insurance

One of the insurers most directly affected by COVID-19 and the ensuing governmental shutdowns is the auto insurance industry.

With fewer people driving, the risk models that auto insurance companies used to set premiums have been tossed out. The policies they wrote months ago assumed drivers were going to spend much more time on the road, and thus would have represented a much greater risk to insure. Now that the morning commute is a recent memory for many, countless otherwise insured miles are now not being driven, meaning that the auto insurance industry may have inadvertently overcharged their customers.

In response, companies are sending refunds – typically 15% to as much as 35% — because drivers are on the road less.

Those refunds are being sent as statement credits for people on installment plans, or as checks being mailed or direct deposited to people who paid upfront.

Many auto insurers are also making donations to community relief efforts and to help community organizations.

Many are also working with the customers to offer payment relief and waiving late fees and suspending cancellations because someone can’t make a policy payment.

Some insurers are also extending coverage to commercial use of personal vehicles, where in the past, if someone used their car for a commercial purpose, it might have been excluded from their coverage, some insurers are now stepping in and saying that would be a covered use.

Policyholders need to beware of scams, though. There have been reports of people calling customers and posing as the insurance company, asking for financial information over the phone, supposedly so they can deposit the refund, but ultimately so they can gain access to those people’s accounts and steal their money.

Life Insurance

Insuring deaths due to viruses is really what life insurance is all about, and no standard policy includes an exclusion for global pandemics. Thankfully, that means that if someone had a life insurance policy in place before the pandemic and then died of COVID-19, their beneficiaries would almost certainly be paid out the full death benefit — presuming the insured person paid their premiums on time and was fully honest when they applied for the policy.

That’s not to say that COVID-19 isn’t having its effects on the life insurance industry. The pandemic has changed many things involved in applying for new policies.

One place that life insurance is being affected is in the realm of international travel. Whenever someone applies for a new life insurance policy, they are given an extensive questionnaire to help assess their risks.

That questionnaire has always asked about plans for international travel, but now those questions carry some added weight. That is because if someone has recently traveled to China, Italy, or any number of coronavirus hotspots, the insurance company is more than likely going to delay the date that the policy goes into place to make sure the applicant doesn’t suddenly come down with COVID-19.

The same goes for the health history questions on the application.

The application is almost certainly going to ask if the applicant or someone they live with has recently tested positive for COVID-19. Again, if the answer is yes, it doesn’t mean the policy will be denied, but it might mean it will be delayed for a few weeks until after a full recovery.

Another standard part of the application process is what is called a “paramedical exam.” This is when a nurse comes to the applicant’s house and takes vital signs, such as height, weight, temperature, and blood pressure. In many areas of the country that are still under lockdown, those exams are no longer possible, and insurers have had to improvise a bit.

Some companies are relying more on big data and electronic medical records for underwriting than before. Others are delaying writing the policies until after the lockdowns are lifted.

One option that people can opt for if they don’t want to bother with the paramedical exam is a “no-exam policy,” but that might not be the right option for everyone, because they cost significantly more than traditionally underwritten policies, and their death benefits often aren’t as generous.

And, as always, applicants must be extra sure to be honest and not glaze over relevant details when they are applying for new policies, because if the insurer catches the slightest whiff of dishonesty, they can void the policy and potentially withhold death benefits, in the worst-case scenario.


In many ways, the insurance industry has been rocked by the COVID-19 pandemic. And in other ways, they saw this coming and were prepared for it.

Regardless, post-pandemic, many changes and questions will likely emerge moving forward.

For one, no insurance policy is likely to offer pandemic or infectious disease coverage any time soon.

Another question mark is whether states, regulators, and local jurisdictions will step in and try to force insurers to pay for things that they thought were excluded in their policy language.

Yet another question is, with insurers continuing to shy away from covering pandemics, will there be a movement for a federally backed pandemic policy much in the same way flood and terrorism coverage is handled.

While the crisis is unfolding, many insurers are working with their customers to waive late fees and come up with payment plans for premiums. And many more are stepping up their corporate social responsibility programs and offering generous donations to organizations working to fight the virus.

Regardless of what happens, though, rest assured that the insurance industry is still in business, still writing policies, and has many products to cover a diverse set of risks.

Michael Giusti is a senior writer at InsuranceQuotes.com. He has worked as a journalist for more than 20 years, specializing in business, insurance, finance, technology, automotive and industry-focused writing.

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In many ways, the insurance industry has been rocked by the COVID-19 pandemic. And in other ways, they saw this coming and were prepared for it.
covid 19, insurance, life, auto, health
Friday, 12 June 2020 02:34 PM
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