I’m sure I speak for most of us when I say the coronavirus pandemic has turned our lives upside down. Job losses, economic meltdowns, and general anxiety are what you have to deal with.
Covid-19 has most likely left you re-evaluating your life and asking yourself a LOT of questions. Chief among them being: how does coronavirus impact homeowners insurance?
Most of you weren’t there when the last flu pandemic swept through the continent in 1918. I know I wasn’t. So, you don’t exactly have a step-by-step guide on what to expect, how finances are affected, or how to handle the “new normal.”
But one thing is for certain; your finances WILL take a knock. What with most people spending time at home rather than earning a living? It doesn’t help that the projections on job losses are pretty bleak with almost 50 million Americans expected to lose their jobs because of this pandemic.
I’m sure you’re left with more questions than answers.
Are the premiums going to be raised as a result of the pandemic? What happens if I can no longer afford the premium or skip a payment? What to do if home insurance drops you? How do I make claims while under isolation?
Will my claims even be processed – as in, will any claims administrators be working? What if I want to sign up for home insurance? Is that remotely possible?
I understand your uncertainty, which is why I’ve taken the liberty to answer all these questions and more.
Will Coronavirus Increase My Home Insurance Premiums?
To say that the coronavirus will increase your home insurance premiums isn’t entirely true. Home insurance premiums are increased because of one of two reasons:
These are expenses that arise as a result of a specific claim. Courts, lawyers, and witness fees are just a few examples. But the bottom line is they can only come into effect when you DO claim on your home insurance. In a nutshell, if you don’t claim, your premiums aren’t likely to change.
Much like claim expenses, loss ratios also arise if you claim. Insurance companies calculate them as your insurance claims are paid plus any adjustment (claim) expenses, divided by your total earned premiums.
In layman terms, this simply means your home insurance premiums will increase if you claim. And not necessarily because there’s a pandemic rampant or that you’ve contracted the virus. The latter is more of a health insurance issue than a home insurance one.
This begs the question: what are the chances of you claiming home insurance while under lockdown?
How Staying Home Affects Home Insurance Claims & Premiums
There are two sides to this scenario. Firstly, if I’m to be honest, chances of incidences such as property damage or general wear and tear are more likely when you’re at home than if you aren’t:
- Boredom can strike, kids can become restless and a window might get damaged while playing football in your backyard.
- Property damage might result because of domestic violence, which unfortunately has increased by 20% during the lockdown.
- The food delivery guy might slip and fall on your snow-covered porch, resulting in a bodily injury claim.
- Research has shown that insurance fraud increases during pandemics. Unfortunately, this tends to raise home insurance premiums.
- Also, civil unrests aren’t uncommon during uncertain times. Property damages can occur and files are claimed, resulting in higher premiums.
That’s just putting it bluntly. But you can’t completely rule out such possibilities. On the flip side, staying at home might actually reduce the number of claims as a result of the following:
- Fewer break-ins since your home isn’t left vacant.
- You can identify issues such as plumbing problems in your home a lot faster before they escalate and cause massive damage.
- Since fewer people are visiting your home, there are fewer liability claims.
How Covid-19 Affects Home Insurance Payments
With almost 70 million Americans working in jobs that are at a higher risk of lay-offs, it’s only natural that uncertainty regarding the ability to pay your premiums arise. You’ll be happy to know that most governments aren’t ignorant to the plight of homeowners regarding payment of insurance premiums. Are you finding it difficult to keep up with your premiums?
Rest easy knowing that most insurance companies have put in place continuity plans for their customers. This is in response to a directive from the National Association of Insurance Commissioners.
For instance, your insurance company can provide you with a temporary payment suspension plan. You can defer your payment for up to 60 or 90 days.Just bear in mind that the exact continuity plan will differ from state to state and from one company to the next.
Your best bet is to get in touch with your home insurance company and work out a plan that you’re comfortable with. Whatever you do, don’t duck and dive on your payments because the insurance company WILL drop you.
This brings me to the next question.
What To Do If Your Homeowners Insurance Drops You?
There are numerous reasons why your homeowner’s insurance company can drop you. Filing multiple claims or if a recent home inspection deems your property as high risk are just some of the reasons.
Of course, not paying your premiums also tops that list. As mentioned, your finances are likely to be negatively affected because of the coronavirus. This is because if you’re like most people, then you’re probably relying on your savings. Reasons for this can be because:
- You’re experiencing a salary cut.
- You’re not raking in as much revenue if you’re a business owner since most companies aren’t operating at full capacity.
- You’ve been laid off.
Whichever the case, know you should receive at least a 45-day notice period informing you of the cancellation. If you had already filed a claim, the insurance provider might still honor the claim since it happened during your policy period. If your policy is canceled because your property is considered high risk, you have the option to dispute the cancellation and file a complaint.
What if the cancellation is because of non-payment of premiums? You may have to look for another insurance company. Deferring payments with no explanation whatsoever makes you a high-risk individual and affects your credit score. You do, however, have the option to look for companies that specialize in assisting high-risk homeowners.The only downside here is you may have to pay higher premiums.
My advice? Avoid filing too many claims unless it’s ABSOLUTELY necessary. If it’s a financial issue, rather be upfront with your insurer and explain your circumstances as mentioned earlier. Your insurer might be able to work out a continuity plan for you.
How Do I File A Claim During The Coronavirus Pandemic
With most business operations at a standstill, how do you file a claim during this pandemic? In fact, CAN you file one? Fortunately, that’s not a train smash as most companies have resorted to digital solutions ever since the pandemic started. And that includes insurance companies.
You can now file a claim online as opposed to face-to-face. For the evaluation process, you may have to submit the necessary documentation online, which includes an inventory of your damaged property. You’ll also need to submit any receipts if you performed any temporary repairs.
What I can point out is that the timeframe of the claims process might not be as fast as before. You’ll just have to be patient.
How Are Inspections Handled During The Coronavirus Pandemic?
Inspections are part of the evaluation process. So, how are insurance companies handling the inspection process?
Social distancing is one of the key measures advocated to curb the spread of coronavirus. It’s not surprising if you feel anxious and uneasy about people dropping in. Obviously, the last thing you need is for a random inspector to come to your home for an inspection. Again, that’s where digital platforms come in.
Insurance companies are now conducting virtual inspections. You can now simply take photographs of your damaged property and send them to your insurer.
You can’t, however, run away from the fact that contractors will come in for repair work. While some service providers may have temporarily halted their operations, essential workers such as plumbers can still come through.
Hopefully, I’ve covered all your burning questions regarding how coronavirus impacts homeowners insurance.
It’s always wise to be proactive in such cases. To protect yourself and your family, you may have to shop around for a new policy altogether. Try to look for an affordable home insurance policy that you can afford to afford deferring on payment.
Also, try by all means to make your home as safe as possible. Adding fire alarms or upgrading your home security system is worth considering.
You can also opt for higher deductibles because they’ll reduce your premiums. Why? Your insurance company will pay less in the event of a claim.
And that wraps up my article. Try out these tips and do the very best you can to protect yourself, your family, and your home during this pandemic.