Why Your Properties MIGHT NOT BE INSURED During the Coronavirus Outbreak

If you own rental properties, there is a possibility that the coronavirus pandemic could affect how those properties are insured. Fortunately, insurance companies are working with customers to make sure this issue does not go unaddressed.

Due to the expanding volume of jobless claims in today’s coronavirus economy, insurance providers say they are concerned about Americans’ inability to pay for insurance on their personal property, in the case of renters, and their home, in the case of homeowners. For rental owners, this issue is magnified both because you are responsible for more properties’ insurance and because your renters may let their renter’s insurance lapse during this time.

Some states, like California, have imposed grace periods on insurance companies to make sure that coverage extends for at least 60 days after nonpayment. Other companies are offering to work with customers on a case-by-case basis. The issue is not restricted to property insurance and renter’s insurance, either. Auto insurance customers may also be able to access this type of grace period.

According to insurance company Liberty Mutual, “We have empowered our employees to work with each individual customer to provide personalized support…. For home and auto insurance customers who are negatively impacted by coronavirus, we are extending payment dates and waiving fees.”

Of course, as with other payment waivers and forbearance programs, customers should contact their providers directly and have a clear conversation about what taking advantage of the grace period entails. In most cases, it does not mean that you will not have to make the payments eventually and, outside of waiving fees, many companies can neither afford nor are willing to waive payments entirely.

Claims Processing is Getting More Complicated

Even if you are up-to-date on your insurance policy payments, you could still end up with insurance-related trouble that affects both you as a property owner and your tenants in the event of a fire or other property damage. Fabio Faschi, property and casualty team leader at Policygenius, explained, “It’s not so much that there are a lot of claims occurring, but simply the matter that there is a physical impediment in terms of the claims being resolved or inspections being resolved.”[1]

Shelter-in-place and work-from-home guidelines generally prohibit nonessential travel and home visits, which makes it difficult to inspect damage or resolve claims. Some insurers are opting to perform exterior inspections only, and others are working to adopt video-enabled alternatives. Property owners should contact their insurance providers before this happens to find out what they should do now to expedite a claim in the future and establish a clear “before-and-after” scenario in advance[2].

More time at home will certainly lead to more cumulative property damage in the long run, Faschi warned.

“The more time you spend in a place, the more likely that something could actually happen, whether it is you using appliances or whatever else it might be,” he said.

Some investors are concerned that the concentrated wear and tear on their rental properties could result in more serious, expensive repairs when a lease ends and the tenant moves out. Liability issues are also becoming more of a concern, since more accidents are likely to happen in homes since more people are staying home and because those people are ordering more things delivered to their homes. For example, if a delivery person slips on your sidewalk and falls, you could be liable for their injury. At least, most insurers say, you probably do not have to worry too much about being held liable for someone catching COVID-19 in your property since most policies have virus and pathogen exclusions that will likely apply.

Are you worried about your property insurance right now?

Thank you for reading the Bryan Ellis Investing Letter!

Your comments and questions are welcomed below.




[1] https://magazine.realtor/daily-news/2020/04/02/homeowners-renters-run-into-insurance-snags

[2] https://www.forbes.com/sites/dimawilliams/2020/03/28/how-coronavirus-may-affect-home-and-renter-insurance/#65de70e9133b

Leave a Reply