A New Kind of Insurance: Coverage for the Commute
Your commute is getting longer. You find yourself getting a jump on work by making a few cell phone calls while you drive or pulling out the laptop on the train.
What happens if you get hurt during this increasingly protracted and risky portion of the day? Even if you are working while traveling, your employer’s insurance policy typically considers your drive time to be your own business and doesn’t cover the commute.
Or maybe you are among those who, usually with a wink from your insurance agent, try to keep their auto insurance rates low by underreporting commuting distance. And anyway, auto insurance may cover expenses up to your policy limit, but may not offer much to take care of your family after you’re gone.
A few employers are stepping into the breach by offering a new kind of insurance coverage that pays extra if their workers are killed or seriously injured on the way to the office.
“In this commuter world that we live in, it’s not uncommon for people to have a 1 1/2- or two-hour commute in both directions,” said Marcia Carruthers, vice president of the Disability Management Employer Coalition, which advises employers about benefits. “That’s a lot of time that people are spending on the road. This is a way of providing an extra comfort level for their employees.”
The option, part of a type of insurance policy that covers accidental death and dismemberment, is relatively cheap, because workers are covered only during a small period of the day and commuting deaths are relatively unlikely, said Brenda McFarland of Mercer Human Resource Consulting in Los Angeles.
But it can provide some peace of mind at a time when employers are limiting the money spent on life insurance and other benefits.
“Employers don’t buy as much life insurance as maybe they should because it’s so expensive,” McFarland said. By contrast, she said, commuter insurance policies add just a few cents per month to the cost of an accidental death policy.
The cities of Phoenix and Mesa, Ariz., bought commuter insurance policies after two employees of Phoenix, one of them a police officer, were killed on the way to work.
“The feeling in the region was that the insurance benefit was not enough,” said Donna Salemi, assistant human resources director for Mesa. Under the policy subsequently adopted by the city, families of employees killed on the way to work would receive $200,000 in addition to their regular insurance benefits.
The coverage is important, Salemi said, because Mesa can afford to provide only accident and life insurance worth one year of an employee’s salary -- on average $37,500. The commuter benefit substantially increases the coverage amount if workers are killed or maimed during what many consider an exceptionally risky time. It costs just $13,000 per year to cover Mesa’s 4,000 workers.
In the five years since the policy was adopted, Mesa has not had to provide the benefit, but the policy bought by Phoenix has paid out twice -- $200,000 to the family of an employee who was killed, and $100,000 to an employee who was severely injured.
“You’re more at risk commuting to and from work,” said Mike Pellino, accident product manager for Cigna Corp., which provides the Phoenix policy and is marketing a more modest policy that would pay up to $25,000 if employees are killed on the way to work. Under the new Cigna plan, workers are covered no matter how they get to work, whether by car, bus, bike or even on foot.
This type of coverage is still relatively rare. Cigna introduced its new version this year and could not provide the names of clients in California. American International Group, which sold the Mesa policy, would not release the names of customers. Several experts on employee benefits had not heard of it.
“Some organizations seem to be interested in it, but there doesn’t seem to be a huge clamor for this type of insurance,” said Carroll Lachnit, editor of the trade magazine Workforce Management.
The insurance, she said, is one of several types of coverage -- including pet insurance -- that employers use to make their benefit packages more appealing. Typically, an organization negotiates a low rate on such a policy but requires employees to pay for it. This makes the company seem to have a more generous benefits package without costing it anything.
McFarland of Mercer said that even a modest commuter insurance plan could help consumers, pointing out that in 2001, 98,000 Americans died accidentally, 42,000 in automobile crashes.
Such plans could also reduce a new and growing liability risk to employers, McFarland said: As more people telecommute or use cell phones for business on the way to work, the line is blurring between work and home. Yet most workers’ compensation policies cover employees only in the company parking lot or at the office.
Commuter insurance, she said, could help bridge that gap.
The insurance is not typically available for purchase by individuals. Rather, it is marketed to corporations for inclusion in their accidental death and dismemberment policies. Some companies pay the full freight, while others pass the cost on to employees.
Employees can find out if commuter insurance is available to them by checking their open-enrollment packets or contacting the person who handles their benefits.
“They have absolutely nothing to lose and everything to gain by finding out if this is something that is offered under their company’s voluntary or basic plan,” McFarland said. “And the more employees ask about it, the more human resources is going to think maybe this is something we ought to be thinking about.”
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