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How COVID-19 Has Significantly Impacted Homeowners Insurance

homeowners insurance and covid-19The coronavirus pandemic has disrupted many aspects of society, including homeowners insurance. The new normal has transformed the housing market in many ways. New and existing homeowners are becoming more attuned to digital channels, are moving to the suburbs, and have a preference for community in the places where they live, work and play.

Below, learn more about how the needs and preferences of customers have evolved and what homeowners insurers should be doing to adjust and respond with the times. If you need help with an insurance-related issue, the legal team at Schmidt Kramer is here to help in a free consultation.

The Customer Experience Has Evolved

COVID-19 has created new expectations for the customer experience. Customers are turning to digital channels to research and purchase products, and insurance is no exception. According to Verisk, a leading data analytics company serving customers in insurance, 75 percent of individuals using digital channels for the very first time say they will not go back when things return to “normal”.

Customers are now more willing to share personal data in exchange for the speed, convenience and individualized service available from digital. The customer’s growing preference for mobile has left many homeowners insurers to adapt to improved in-app functionality to create a more interactive experience. Homeowners insurers not prepared to meet the digital shopping expectations risk becoming irrelevant.

Increased Liability for Homeowners

Stay-at-home-orders to mitigate the spread of the virus have resulted in more behaviors that may increase liability risk. Many homeowners during this time have become first-time pet owners. However, statistics show that even before the pandemic, thousands of home insurance liability claims due to dog bites and other dog-related injuries are filed each year. The number of incidents is expected to increase.

Homeowners insurance typically covers dog bite liability expenses up to the policy limits. If these limits are exhausted, the dog owner would then be responsible for all damages above that limit. Some insurers may not even insure homeowners who own certain dog breeds, such as pit bulls. Once a dog has bitten someone, an insurer may charge a higher premium, fail to renew a policy, or exclude the dog from coverage.

There has even been a greater demand for above-ground pools. Pools, however, increase the risk of someone being injured on the property. A homeowners policy typically provides a minimum amount of liability coverage that should be increased if a pool is installed. If a guest is injured while in the pool, a homeowner could potentially face medical or legal expenses from the incident.

An increased sales of outdoor toys (trampolines, bounce houses and playpens) in households across the country also gives rise to liability issues. Homeowners should know if they are protected by their insurers if an accident happens. For instance, trampoline injuries are some of the most common injuries in children and many policies do not cover trampolines. An umbrella policy for additional coverage may be needed.

Housing Market is Booming

Despite the coronavirus pandemic, many Americans are in the market to buy or sell their homes. Low interest rates have reinvigorated the housing market. Sales of newly built homes jumped 55 percent annually in June, marking the largest annual gain since homebuilding started after the recession in 2008.

First-time home buyers have raised the homeownership rate to 65.3 percent, a seven year high. There has also been an increase in people moving from urban, city dwelling to the suburbs. The appeal is primarily affordability, but the pandemic may have accelerated the move outside cities.

Homeowner Claims Being Filed

Claim frequencies for the first quarter of 2020 declined almost 16 percent compared the same quarter last year. Homeowners claims are being filed less frequently because people are staying home, however the severity of claims has risen by more than 13 percent due to non-catastrophic homeowner losses, such as water damage. It is unclear if the frequency of claims will continue to decline in the next quarter.

Reach Out to Schedule a Free Consultation

The lawyers at Schmidt Kramer are well-versed in Pennsylvania insurance laws and are prepared to help resolve insurance-related disputes. An initial consultation is complimentary and confidential. You are under no obligation to retain our services after meeting with us.

There are no upfront fees unless we help obtain compensation from an insurer on your behalf.

Have Questions? We Have Answers. Ph: (717) 888-8888.