Payment holidays and premium reviews confirmed for insurance customers struggling due to coronavirus

What help will be available to insurance customers?

Under the new measures, firms should consider what options they can give customers during the pandemic. This includes:

• Reassessing the level of cover the insurance provides. If a customer contacts the firm, the insurer should assess if the insurance is still suitable for the customer. For example, if a car insurance customer is now driving many fewer miles, the insurer should look at lowering the mileage covered by the policy, which could result in the customer benefiting from a lower premium.
  
  
• Reassessing any extras on the insurance. Many insurance policies come with "add-ons". For example, people may have taken key cover on top of their car insurance, which they no longer need as they're not driving. Insurers should see whether these extras could be removed and, if so, take them off and reduce premiums accordingly.

Who's eligible for a payment holiday?

Like the measures which have been brought in for other financial products, it's only customers whose financial difficulties were caused by the coronavirus situation who are eligible.

If you're already struggling financially for unrelated reasons, you could be offered other forms of "forbearance" (tolerance and help) under existing rules.

Payment holidays don't have to be offered automatically, so you'll need to ask for help. Firms will first reassess your cover to see if your premium can be reduced, and then look into offering payment holidays if you need further help.

Insurers won't be expected to investigate why you're asking for a payment holiday, though they could decide not to give you one if this would clearly be against your interests. Some may also not grant payment holidays if you're coming to the end of your insurance year, and granting such a holiday would keep you tied in past the end of your insurance renewal date.

But if either of these were the case, insurers would be expected to help you in other ways – which could include accepting reduced payments, waiving late fees or letting you change your repayment date free of charge.