The Financial Conduct Authority has said people struggling financially as a result of coronavirus will be entitled to a payment holiday of between one and three months from Monday, 18 May.
As well as taking a break from bills - firms have been told to let customers change to cheaper policies and remove add ons at no cost if their lifestyles have changed during lockdown.
The FCA's Sheldon Mills said: "As with other areas of finance, we have worked quickly to draw up measures to help policyholders in financial difficulty because of coronavirus."
He added: "Many firms in the insurance industry have already taken some of the actions we are suggesting here to support customers, such as premium reductions, discounts, waiving fees, and payment deferrals.
"The measures confirmed today will provide urgent support to those that need it."
The FCA said that insurance firms will be required to look at the following if a customer is struggling:
- Reassess the risk profiles - which may have changed because of coronavirus offering room to materially lower premiums
- Consider if cheaper products would be a better fit or add ons are still needed - for example key cover or moving from fully comprehensive cover to third party fire and theft
- Waiving cancellation and other fees associated with adjusting customers’ policies
This could mean a reduction in monthly premiums or a partial refund for customers who paid up front.
GoCompare chief executive Lee Griffin said: “Insurance, and car premiums particularly, can be a significant monthly outgoing for many people and millions of households are facing a period of reduced income as a result of the current pandemic.
"These steps will hopefully ensure that these customers can reduce their outgoings while remaining insured and protected."
If changing the policy isn't enough to make up for payment difficulties, the FCA expects firms to give customers a payment deferral - unless it's obviously not in the customer’s interests to do so.
Payment deferrals will be between one and three months, though the FCA added insurance companies can go beyond three months if they choose to.
Customers can request payment deferrals at any point between 18 May and 18 August 2020.
If deferring payments isn't appropriate, firms have been told to offer other ways to help out people struggling.
These potentially include:
- accepting reduced repayments, or rescheduling the term
- waiving missed or late payment fees
- letting customers to change their repayment date without any cost
The FCA added that is also expects firms to review any interest rates being charged on instalments in case they breach rules on trating customers fairly during coronavirus.
Customers who are struggling should contact their insurer or insurance broker to discuss options.
The FCA added that it's important people don’t leave themselves uninsured and should not hesitate to contact their insurer if they have problems.
