How COVID-19 Impacts Homeowners Insurance

January 4, 2021

The COVID-19 pandemic has resulted in tremendous changes across the globe. From where we work, to the ways in which we socialize and, yes, even our homeowners insurance—our lives have been turned upside down over the past year.

Here’s how COVID-19 may be impacting your homeowners insurance:

Americans are now spending more time at home than ever before due to stay-at-home orders, social distancing, and new business protocols. While it’s certainly nice having more time to spend with our families, having a full house for longer periods of time can lead to more wear and tear throughout the home.

As many of us have been working and learning remotely for the better part of a year, minor homeowners insurance claims have become more frequent due to increased usage around the home, while large claims have decreased as homeowners are detecting smaller issues before they become more damaging. Disclosure 1 1 Independent Agent Magazine, “COVID-19’s Impact on Homeowners Insurance,” accessed Jan. 4, 2021, https://www.iamagazine.com/markets/covid-19-s-impact-on-homeowners-insurance(opens in a new tab) Spending more time at home means you’re not just noticing when things start to go wrong, but you’re most likely preventing damages from occurring in the first place. Fewer break-ins and fires have been reported Disclosure 2 2 Independent Agent Magazine, “How The pandemic Turned Homeowners Insurance Upside Down,” accessed Jan. 4, 2021, https://www.iamagazine.com/magazine/issues/2020/december/how-the-pandemic-turned-homeowners-insurance-upside-down(opens in a new tab) and there are bound to be less burst pipes this winter with homeowners keeping their thermostats up and water running.

On the other hand, companies are following new protocols in order to adhere to social distancing efforts and stay-at-home orders, which has caused delays in resolving claims. For some carriers, home visits are no longer applicable or are difficult to schedule due to state-wide guidelines. Disclosure 3 3 Forbes, “How Coronavirus May Affect Home And Renter Insurance,” accessed Jan. 4, 2021, https://www.forbes.com/sites/dimawilliams/2020/03/28/how-coronavirus-may-affect-home-and-renter-insurance/?sh=339de607133b(opens in a new tab) While virtual options are available with many carriers, not all policyholders have the technological means to successfully settle a claim virtually.

Make sure to look over your homeowners insurance policy to confirm that you have appropriate and adequate coverage. Since working and learning from home, it’s possible that you now have more high-cost items in your house. From laptops, tablets, computers, and office equipment, you want to ensure it’s all covered if damaged.

Many people have thrown themselves into home improvement projects over the last several months, which is always an exciting (i.e. stressful) endeavor. In June of 2020, kitchen and bathroom renovations jumped 40%, and The Home Depot’s sales increased 23% in Q2 of 2020. Disclosure 2 2 Independent Agent Magazine, “How The pandemic Turned Homeowners Insurance Upside Down,” accessed Jan. 4, 2021, https://www.iamagazine.com/magazine/issues/2020/december/how-the-pandemic-turned-homeowners-insurance-upside-down(opens in a new tab)  After you finish updating your home, check in with your insurance professional to make sure your replacement costs are accurate and to make any pricing or underwriting adjustments.

Liability coverage is also something to keep in mind these days. Whether you’re having clients over while you work from home, or hosting homeschooling pods while your child learns remotely, you may need to adjust your liability coverage in case a client or student were to get injured at your house.  

While COVID-19 may not be directly affecting homeowners insurance rates, the extreme spike in unemployment has greatly increased the number of families struggling to afford their housing and insurance coverage. 

In May of 2020, the COVID-19 pandemic caused the U.S. unemployment rate to skyrocket, reaching over 14%. Disclosure 4 4 Pew Research Center, “Unemployment rose higher in three months of COVID-19 than it did in two years of the Great Recession,” accessed Jan. 4, 2021, https://www.pewresearch.org/fact-tank/2020/06/11/unemployment-rose-higher-in-three-months-of-covid-19-than-it-did-in-two-years-of-the-great-recession/#:~:text=Unemployment%20rose%20higher%20in%20three,years%20of%20the%20Great%20Recession&text=The%20COVID%2D19%20outbreak%20and,20.5%20million%20in%20May%202020(opens in a new tab) With the highest unemployment rate since the Great Depression, many Americans haven’t been able to afford to pay for housing or their homeowners insurance policies. In July of 2020, about one-third of Americans weren’t able to make their full rent or mortgage payments. Disclosure 5 5 Bankrate, “Homeowners Insurance and Coronavirus,” accessed Jan. 4, 2021, https://www.bankrate.com/insurance/homeowners-insurance/homeowners-insurance-and-coronavirus/(opens in a new tab) While relief plans have been made available, most of them only cover rent or mortgage payments and don’t include insurance premiums. Thankfully, many carriers recognize how this financial crisis is impacting homeowners across the country and are extending due dates, waiving late fees, and are willing to work with homeowners to establish flexible payment plans.