Bouncing Back from COVID-19: What to Do When Your Client Has a Lapse in Coverage

Businesses across the nation are still reeling from COVID-19, whether they thrived or sank during the pandemic. In many instances, business owners may have let their small business insurance lapse. If a business closed during the lockdown and was unable to operate, many owners were tempted to let insurance lapse since they thought there was little to no chance they would file a claim. Others struggled financially and were unable to pay premiums on time. Whatever the case, if your clients have been without insurance for weeks or even months, here are a few tips on how to handle it so they can bounce back from COVID-19.


Recovering From COVID-19

The pandemic forced many businesses to close and halt operations to prevent the spread of the coronavirus. While stay-at-home orders were enforced, the commerce, staffing, and many other industries fell silent. Millions of Americans were laid off or furloughed at the start of the coronavirus outbreak, which meant that the jobs market crashed and commerce was at an all-time low. The loss of income made people more careful with their money, and businesses struggled without their reliable income.


With more knowledge about the virus, improved rates of recovery, and preventative measures in place, businesses are feeling confident to open their doors again – and customers feel confident to return. With more businesses coming back to life, owners may be reviewing their insurance coverage.


Lapse in Coverage? Solutions to Get Covered

If your client is worried about a lapse in coverage because of the strain the coronavirus put on their finances, they are not alone. Companies and individuals across the nation are looking to reinstate their coverage with more affordable payments in place.


However, a lapse in coverage exceeding 30 days could place the business owner in the assigned risk category. This is when you are categorized as high risk by an insurer, therefore, you cannot secure the best rates for your insurance policies. These businesses and individuals are assigned by the government to insurance companies who tend to charge higher than average premium rates to accommodate the high chance of filing a claim. While assigned risk is certainly a possibility, don’t assume it is the only option.


Before you look around for coverage, talk to the professionals at PMC Insurance Group. We can help you assess the needs and risks of your clients. There are number risks of letting a policy lapse; including the potential for  accidents not being covered and the full financial liabilities of property damage and/or workplace employee injury costs to the business, large financial penalties by the Department of Insurance, as well as financial concerns such as breaking a lease/contract agreement that requires the business owner to have insurance. There are consequences of allowing a business insurance policy to lapse, but our qualified team can help you during this difficult time sensitive issue.


How Agents Can Help

As an independent agent, you need to be sure that your clients understand the risk they take on by failing to pay their premiums and letting their insurance lapse. Throughout this challenging period, many agents have crafted payment plans for customers and exclusive deals for healthcare workers to help people make their premiums more affordable. With that in mind, here are some actionable ways to help your clients bounce back from the pandemic.


  • Reevaluate exposures for transformed businesses – Throughout COVID-19, many business owners had to adapt to the changing needs of the market as well as adhere to strict government guidelines. Businesses that previously relied on foot traffic may now deliver their products. Agencies that worked in offices may now have employees working from home. Businesses may have changed their operations entirely, resulting in new exposures and risks that need to be adequately covered with a new business insurance policy. Instead of reissuing their previous policy, ask questions about the past few months and how their operations may have transformed.
  • Jobs and class codes may need to be reclassified – As businesses reimagine themselves, their roles may have evolved. Job roles may have changed, and that means their jobs and even class codes may need to be reclassified in their workers’ compensation policy. A classification code should be changed during this time of COVID-19 when:
    • An employer’s business operation has changed (new operations have been added or certain business operations are no longer performed)
    • The codes on an employer’s policy no longer reflect the operations conducted by the business
    • Better codes exist that more accurately reflect the business operation
    • Payments made by an employer to paid furloughed employees as a result of federal, state, and/or local emergency orders, laws, or regulations issued – NCCI Code 0012 would be applied to these employees and excluded from the workers’ comp payroll calculations
    • An error was made on the original classification

The proper classification of job processes is the starting place for the proper pricing of a workers’ compensation policy. If a business is looking for more affordable workers’ compensation premiums, then be sure to conduct an audit into their job and class codes.

  • Explain about lapse consequences in your onboarding material – When acquiring a new client in this new age, be upfront about what it means to lapse or surrender an insurance policy. Cover important topics such as grace periods, reinstating coverage, and the top practices to avoid a lapse, such as calling the insurer as soon as possible. If a client knows that there are other options you can offer before they let a policy lapse, they are more likely to reach out to you for help before dropping their coverage.


PMC Workers’ Compensation experts can help you retain clients and allow them to maintain affordable coverage when the unexpected happens. Find out how PMC Insurance can help. Contact us today at 781-449-7744 or

By PMC Insurance Group

Since 1996, PMC Insurance Group has worked to help independent agents grow their client base by offering workers' compensation solutions for a wide array of businesses. As one of the most distinguished workers' compensation wholesalers in the country, we have the tools and resources to help you create coverage programs for both small businesses and large accounts.