The new lay-up credit is available to voluntary commercial auto policyholders in all states
Last month, the Arbella announced a new auto insurance credit in response to the COVID-19 pandemic.
Entitled the ‘Arbella Lay-Up Credit’, it seeks to offer voluntary auto insurance policyholders an optional ‘lay-up credit’ for those who have placed their vehicles in storage for at least 30 consecutive days since April 1, 2020.
According to the Quincy-based insurer, the amount of the credits will be determined by the number of days a policyholder’s vehicles will have been out of service. The goal of the new credit is to help ease the burden of many businesses that have been adversely impacted by COVID-19.
Since this appears to be one of the only insurers to offers such a credit to its commercial auto policyholders, Agency Checklists wanted to learn a bit more about how the new credit works and how it has been received.
In response, William S. Hughes, CPCU, Vice President, Commercial Lines, Arbella Insurance Group kindly answered a few of our questions via an email interview. His answers are below:
Why did Arbella institute the credit?
We wanted to support our customers during this difficult period. Not only were they feeling the financial impact of the pandemic, but many also had fleets that were idle. With this reduced over-the-road exposure, and an opportunity to provide some premium relief, it was the right thing to do.
What prompted the company to put together this credit?
We worked closely with our partner agents as to how we could best assist our customers by allowing them to see premium relief for vehicles that were not being driven. We wanted to make the process of requesting the endorsement easy on our agents and customers. Also, as vehicles come back on the road, the customer knows they have their policy limits in place.
Who else is providing a similar credit program if anyone?
We have seen some other carriers, offer relief in different ways. We can’t speak for other carriers but our approach was designed to make it as easy and flexible as we could to help our insureds in this unprecedented time.
Is this credit program in response to the Commissioner’s Bulletin requesting insurers to consider deferrals and moratoriums on payments?
It was important to us to provide relief to all our customers during these difficult times. Arbella had already announced a Give Back program and we are in the process of refunding over $22 million to our personal auto customers. We also provided moratoriums on cancellations for nonpayment to all of our customers.
We felt it was important to provide the same credit to our commercial auto customers during this crisis. The lay-up credit is an additional tool that we can use to help our customers where warranted.
How long do you anticipate this program will be available?
We will continue to monitor the situation and need for our customers to have this tool and flexibility available.
How long do you anticipate commercial insured may need this program?
Arbella will evaluate the market need continuously and we will be responsive in the marketplace. Most of the requests we have received range from 30 – 60 days.
Can insureds request the program before they put the vehicle in storage? It seems the notice says the insured gets the credit after the vehicle has already been laid up for 30 days.
Yes, they could. The agent and underwriter would discuss the specific circumstances the customer is facing. The reality of what we have seen, however, is that customers already had some of their vehicles idled and we wanted to be responsive to that fact.
How successful has the program been? Have many commercial insured’s have taken advantage of the program to date?
We believe the program has been very successful as measured by feedback we have received from our partner agents and customers. We have had approximately 225 customers request the endorsement to date.
What happens if the vehicle is used during the period the Lay-Up Credit is in effect and has a loss or causes a loss?
Every claim is different and evaluated based upon its unique circumstances, but the intent of the Lay-Up Credit is that the vehicle is not to be driven during a certain period of time. The customer is informed at the time of purchase that they must alert their agent before resuming use of the vehicle.
Is the endorsement only a policy credit endorsement or is there a Lay-Up Credit endorsement specific to this program?
The advantage of the Arbella Lay-Up credit is that it applies at the vehicle level so an insured can either “lay-up” specifically identified vehicles, or all vehicles if business has stopped due to the shutdown. We have seen our commercial customers affected in different ways. Our credit allows for the flexibility to help them.
How have the agents received the program?
Our agents have expressed that they view this as a very favorable development and help to our customers. They appreciate the premium relief the endorsement provides while businesses were impacted, and fleets remain idle. Also, as importantly, the ease of requesting and implementing the endorsement. We wanted to ensure we could provide this relief without making our agents or insureds have to jump through a lot of hoops.
How have the insureds responded to the program? Are there many insureds who have used the Lay-Up Credit yet?
To date we have approximately 225 customers who have requested the endorsement
Is there any estimate of the premium credit total that Arbella is foregoing under this program that will benefit insureds?
It is too early to provide any estimates, but we have seen this credit help a number of our customers. With the recent positive trends and the opening of our economy, we are hopeful our commercial customers will be able to resume their businesses again.
