Why RLI Transportation is letting customers suspend insurance coverage

At a recent UMA Town Hall, several operators were singing the praises of RLI Transportation for going the extra mile to help them reduce expenses during the COVID-19 crisis.

In March, RLI set itself apart in the industry by offering those with public auto policies the ability to temporarily suspend their insurance coverage without charge, as an alternative to deleting vehicles and coverages or canceling their policies. 

Ray Harvey is RLI Transportation’s assistant vice president of public transportation.

RLI said the coverage suspension can be applied to all or a portion of a public auto fleet, and if needed, physical damage-only coverage can be maintained on specified vehicles. Additionally, no premium would be charged for suspended coverage during the period, just as though these vehicles and/or coverages were deleted from the policy.

“We didn’t want to put a timeframe on it because we don’t know how long this highly uncertain environment is going to last, but we felt it was the fairest way to treat our customers. We’re in this together with our operators and agents,” said Ray Harvey, RLI Transportation’s assistant vice president of public transportation.

A long-term investment

Harvey said RLI Transportation is trying to be responsive to operators, whose fleets have been parked since March after most of their business evaporated nearly overnight — a result of mass cancellations forced by shelter-in-place orders aimed at preventing the spread of the virus.

While RLI will feel the pain of losing those premiums, the company sees it as a long-term investment in its customers.

“It’s going to have impact, but we can weather that storm with our customers because of our solid financial position. We hope that when the economy does come back, our customers remember that RLI was there for them,” added Mike Haswell, RLI Transportation’s vice president of business development and retention. 

Clients’ praise

Bus & Motorcoach News reached out to the operators who praised RLI during the chat portion of the April 9 Town Hall session, to ask for more details about their experience. Here’s what three had to say:

Good Time Tours had renewed its RLI insurance on March 15, just as everything began going south for the Pensacola, Florida, operator. “Even that day, people just started calling and canceling everything,” said Jerri Smith, general manager of the family-owned business started by her mom in 1985. She praises RLI for offering the suspension plan to clients by March 19. Of the company’s 12 buses, insurance has been suspended on seven, and a deposit paid for the renewal has generated a credit, which means no payments. “We’ve been a client for several years. They are great,” Smith said.

Bryce Snyder is owner of Lily Coaches, in Bothell, Washington.

Bryce Snyder, owner of Lily Coaches, in Bothell, Washington, said he received a refund when he suspended insurance on two of his three coaches. “I’m 100% happy with them,” said Snyder, who has been a client for a few years after being referred by another operator. 

He left his previous insurance company because his questions weren’t getting answered. This is his first interaction with RLI. “They’ve been a really good company. With everything that’s going on, they’ve been the easiest one to work with.”

John Abbott, owner of Abbott Bus Lines in Roanoke, Virginia, says he has suspended the liability coverage on this entire fleet, which is about 60 coaches. But there is collision coverage on a portion of the buses that are still being paid off. 

“We had enough credits that it’s not an issue for us,” said Abbott, noting the company has been with RLI since 2018 but hasn’t had to file a claim yet. “They’ve been very gracious and very helpful with us. One of the big things is that they allow us to have our own training program for our drivers so we’re able to attract and retain better drivers, due to the way that we’re able to train them. They work with us on that. They’re pleased with the safety program and the safety protocols that we have.”

Goodwill gesture

This is the first time RLI Transportation has ever allowed an indefinite suspension of premiums. It’s limited to public auto policies, which cover passenger transportation. The goodwill gesture has bolstered the company’s reputation with clients who also buy insurance in the transportation truck and commercial specialty auto categories. 

Mike Haswell is RLI Transportation’s vice president of business development and retention.

Haswell says the economic crisis caused by the COVID-19 outbreak is different from other events, such as the Great Recession, because that decline happened over many months.

“We’ve never seen a business go from a fully operational to no revenue in such a short period of time before. This is new ground for the Commercial Transportation marketplace. We’ve done many things to demonstrate value to our customers, but we’ve never had a market literally shut down overnight before,” Haswell said. 

Vehicles remain registered

RLI Transportation President Dan Meyer announced the decision in a March letter to clients.

“Suspending coverage will allow our Public Auto insureds to keep their vehicles tagged and registered during the time the policy is suspended, then resume operations as soon as the demand for services returns,” he wrote.

He added that this option lets customers keep their insurance policy in force with limited or no premium payouts during the time of suspension and without the need for re-underwriting when business ramps back up. Another upside is that in states where vehicles dropped from insurance need to be reported, that’s not the case with suspended vehicles.

Under the suspension option, installment payments are adjusted based on the change in coverage. If an insured wants to put a suspended vehicle back in service, RLI will reactivate coverage upon request at the prorated annual rate. 

There is no premium charge for suspended vehicles, and they will be treated as if they were deleted from the policy. Credits for suspension of vehicles will be spread over the remaining installments. The company is also waiving short-rate penalties for clients who opt to cancel policies.

Moving forward, the publicly traded and employee-owned company will stick with a strategy focused on strong customer service amid rapidly changing dynamics, RLI Corp. Chairman and CEO Jonathan E. Michael told shareholders in April.

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