Homeowners Insurance and COVID-19: Relief Options and Considerations for Our New Reality

Michael Rand
Michael Rand

The COVID-19 pandemic disrupted almost every aspect of American life, and many people are struggling with pay cuts, furloughs, and unemployment. Among those who are still working, some are adjusting to the new reality of working from home.

This has made it difficult for many Americans to meet their financial obligations. Even though roughly 4 million homeowners took advantage of the government’s mortgage forbearance program in May of 2020, many are still waiting for support in the form of a new COVID relief bill that would be passed after this year’s elections.”

But meeting mortgage payments aren’t homeowners’ only concern. If you own your home, you may also be worried about how the COVID-19 pandemic will impact your homeowners insurance.

While homeowners insurance is often less expensive than monthly mortgage payments, you should be aware of any opportunities to save on homeowners insurance during this difficult time. Some insurance companies are offering relief programs to their customers because of the pandemic. If your current insurer offers such a program, you may need to act to take advantage of it.

Furthermore, now may be a good time to shop for a new policy if you’re unhappy with your current one. Not every insurance company may be offering relief, and some insurance companies are offering relief but not necessarily to those with homeowners insurance.

Here, you’ll get a full understanding of the effect the COVID-19 pandemic may have on homeowners insurance, including new policy considerations. We’ll also go over how insurance companies are responding, and what you can do as a policyholder during this time to save by looking for better rates.

In This Article

Homeowners Insurance and COVID-19: Changing Your Mindset During the Pandemic

The pandemic has created several lifestyle changes that may impact your homeowners insurance. If you’re working from home and your children are engaged in virtual education, you can no longer separate your home life from your work life.

When your place of employment and the place where you live become the same, you should revisit your homeowners insurance policy to look for potential gaps in coverage. For example, most homeowners insurance policies won’t cover damages to property that you don’t own, such as property from your workplace. So if bringing your work home introduces new risks or considerations, it may be a good idea to increase your liability coverage.

Similarly, young adults who have been furloughed or laid off may have to move back home if they can’t cover the costs of rent or mortgage payments. Most home insurance policies will cover your adult children’s property if they are part of the household. However, you should still look for limits in your policy and take stock of all your child’s belongings.

If you are staying in your current home, you may be considering renting out space so you can collect rent payments from tenants. But keep in mind that your homeowners insurance policy won’t cover a renter’s belongings if they are not part of your family.

In fact, according to industry expert Fran Majidi of Smart Financial, it’s a good idea to be aware of what’s covered in your insurance policy when you’re cohabitating. “The contents portion of your policy only covers the belongings of the policyholder, not temporary residents,” she says. “It’s fraudulent to claim those belongings as your own, and the limits will probably not cover the guests’ possessions anyway. It’s better to ask your guests to buy a renters insurance policy, which costs very little.”

With everyone at home during the COVID-19 pandemic, insurance companies are expecting insurance claims to increase. 

Young children will be home from school, which could increase the chances of damages to the property. More people will be using utilities more often while away from work, which could increase the chances of electrical fires and plumbing issues.

Dan Baily, President of WikiLawn, says, “You should increase your liability to compensate for this, raising it as high as you can reasonably afford.”

The impact of COVID-19 on new homebuyers

COVID-19 has also impacted new homebuyers. According to one study in Forbes, 80% of would-be homebuyers have either delayed their search for a home or stopped altogether because of the pandemic. This is likely due to financial insecurity or the prospect that employers may need to make deeper cuts as the pandemic continues. 

Mortgage lenders require homeowners insurance, which is just one more expense for homebuyers to consider when buying a house. You must provide proof of insurance to a lender before they will close your mortgage loan. In some areas, you may also need proof of flood insurance.

Most home insurance policies cover risks like wind, hail, fire, and vandalism. You’ll likely need a level of coverage that could fully replace your home in the event of a total loss. 

Although homeowners insurance rates have increased by 59% over the past ten years, they may be temporarily reduced because of the pandemic. As Americans stay at home, there is less risk of unattended fires, burst pipes, and other catastrophes.

Home Insurance Considerations for Our New Reality

Thankfully, there are some steps you can take to either lower your homeowners insurance payments or obtain more liability coverage if your situation demands it. Below you’ll find some actions you can take right now to provide some relief or solutions given the financial strains caused by COVID-19:

  • Reconsider your provider. If your current provider isn’t offering any relief during COVID-19, it may be in your best interest to look for a new insurance provider. Furthermore, some insurance providers may be offering more relief than others.
  • Review your liability coverage. If your home life has changed dramatically and more people than usual are living in your home, you may wish to increase your liability coverage. The chances of damages or losses are increased when children and other family members are spending more time at home. However, you may also wish to decrease your liability coverage to save on regular insurance costs. This might be a possibility of your budget is strained due to the pandemic.
  • Check if your policy covers COVID-19 sanitation. Most homeowners insurance policies only cover direct damage to property or the physical loss of property. This is a narrow interpretation of “physical loss” that refers to apparent damage to property. However, some courts interpret this to mean the loss of a property’s habitability, which could be a possibility if someone in your household becomes ill with COVID-19. Reach out to your insurance company to determine if your policy would cover sanitation costs if this were to happen.
  • Revise your budget. If you’re having trouble paying for your mortgage or homeowners insurance policy, you may need to revise your budget. This would involve allocating funds normally attributed to non-necessary costs to essential costs like your mortgage and your insurance, if possible.
  • Take advantage of discounts. Many insurance companies are offering discounts, rebates, or other forms of relief. Speak directly with your insurance company to learn about what relief programs they’re offering. Some states are also offering mortgage relief and forbearance programs.
  • Get proactive if you can’t make payments. If you can’t make payments on your homeowners insurance policy, you should first notify your insurance company. They may be able to offer you forbearance or other types of temporary relief so that you can stay in good standing. In some cases, you may be able to negotiate a payment plan to repay missed payments.
  • Consider a home business endorsement. According to Dan Baily,You should also strongly consider getting home business insurance to protect your work property and space.” Homeowners insurance may not include protection for business property, such as technology, professional equipment, and files or documents. With home business insurance, you could cover the property you bring home from work in the event they are stolen or damaged in an incident like a fire.

Insurance Companies Providing Financial Relief

Insurance companies are responding to the COVID-19 crisis in a variety of ways. Some are issuing immediate discounts to their customers, while others are offering customers cash rebates as a form of relief.

Here are some of the best homeowners insurance companies offering relief during the pandemic:

AllstateAllstate homeowners and auto insurance are offering their customers flexible payment plans to support them through the pandemic. One example of these is Allstate’s Milewise program, a pay-per-mile auto insurance plan. You can call Allstate to see if you qualify.
American FamilyAmerican Family Insurance is working with customers on a case-by-case basis to offer payment assistance, deferments, and partial payment options to customers with homeowners insurance. You can call American Family Insurance to discuss your options.
AmicaIn some states, Amica is offering grace periods, moratoriums on insurance cancellations, and other relief programs to their homeowners insurance customers. The Amica website currently lists California, New Jersey, New York, and Washington D.C. as applicable states and districts for relief.
Erie InsuranceErie Insurance  is expanding its identity recovery services for homeowners impacted by scams, offering flexible payment and billing options, and making long-term rate reductions for additional relief.
Farmers InsuranceFarmers homeowners insurance customers who have optional IdentityShield coverage qualify for extended identity fraud remediation services through September 30th. This program applies to policyholders’ adult children (26 or older), their spouse, parents, and siblings, including stepbrothers, stepsisters, and adoptive siblings.
GeicoGeico is pausing homeowners insurance policy cancellations due to non-payments in some states.
Hanover Insurance GroupHanover Insurance Group is offering self-service virtual home inspections in some states, which can help policyholders safely submit claims. The company is also waiving its limit on extra living expenses for homeowners who must stay in their homes after covered losses.
Liberty MutualLiberty Mutual is offering payment flexibility to insurance customers depending on their state. Additionally the company will continue coverage for customers who have overdue payments and is offering installment payment plans to help customers pay off any existing debt.
ProgressiveProgressive is continuing to offer protection based on state insurance billing guidelines, and is also offering assistance with payments on an individual basis.

The Bottom Line

Like many Americans, you may be struggling to pay your bills or make everyday purchases in the wake of COVID-19. You may also be experiencing stress due to lifestyle changes in association with stay-at-home orders or working from home.

If you’re struggling to pay your homeowners insurance premiums, your best course of action is to contact your insurance provider to determine what programs they offer. Some insurance companies may provide flexible payment options on a case-by-case basis, even if they don’t have a relief program for property insurance policyholders in place.

There are many considerations to take into account when revising your homeowners insurance. Hopefully, the examples above will be a good place to start while you work toward creating a healthier budget.

About the Authors

Michael Rand is a writer based in Beverly, Massachusetts. He holds a master’s degree in writing from Salem State University and spent years producing content for clients as an agency writer. His work has been featured in publications like Interest.com, The Simple Dollar, and Overture Magazine.