COVID-19: Will it Raise Insurance Premiums?
Undoubtedly, nobody has seen anything like the coronavirus pandemic, so it's safe to assume that no one knows how the pandemic will play out and affect insurance premiums. The closest comparison people have to something this unprecedented event was the 1918 flu pandemic that infected a third of the world's population (around 500 million people) and killed more than 50 million. However, during those times, there were no vaccines or antibiotics to prevent secondary infections. The good thing is science has come a very long way since then. That said, we are in a much better position to combat the pandemic compared to before.
From a home insurance standpoint, this can mean a lesser risk. Since most people are staying at home, some risks are reduced dramatically. For instance:
- Fewer burglaries and break-ins as many people are likely staying at home.
- Homeowners are also able to address specific incidents like burst pipes faster.
- Since people are not visiting each other's homes, liability claims may be fewer.
On the flip side, stress brought about by the pandemic may spur an economic recession, which can lead to more insurance fraud. When a similar scenario occurs, insurance rates might go up.
Some studies also indicate that insurance fraud is more likely during economic downturns. During the Great Recession, a claims analysis showed a 9.6 percent rise in fraudulent claims.
However, these are but speculations as only time can provide the data needed to thoroughly analyse the pandemic's impact on the industry at large.
How Will the Pandemic Affect Home Insurance Payments?
If you are a homeowner and have encountered a few financial hardships because of the pandemic, you'll most likely have a few concerns about paying your insurance or mortgage. Typically, insurers should be informed of any changes to significant information about the homeowner or the home.
During these unprecedented and uncertain times, most home insurers have relaxed their policy requirements. However, some home insurers might restrict cover if the home is unoccupied for more than 30, 60, or 90 days, depending on the insurer.
Generally, homeowners are not penalised for their inability to comply with occupancy requirements as a direct result of COVID-19. To play safe, it would be best to check with your insurer.
What Can You Do to Save on Home Insurance Right Now?
If you want to save money on home insurance at a time like this, keep the following beneficial tips in mind:
Shop around for a new policy
Check if the insurance you have is reasonably priced. Unfortunately, many homeowners discover too late that the policy recommended by their real estate or mortgage lender is too costly.
Make your home safer
To reduce your home's risk, it would be a good idea to invest in smart home security systems, fire alarms, water leak detection devices, etc. By investing in things that can safeguard your home, you are also minimising the risk of loss. You might even become qualified for house insurance discounts.
Increase your excess
Higher fixed excesses can reduce premiums dramatically as the insurer will pay out less for the covered claims. It is crucial to ensure you take on an excess amout you can comfortably spare even with little notice.
Ask about discounts
Many companies offer discounts, so talk to your insurer if you are qualified for any.
Understandably, specific measures might be adapted to keep up with today's uncertain times. If you have any concerns regarding your household insurance, consider it best to talk to your insurer so you'll know about any recent changes, and you'll be able to make an educated decision if you have to.
Guest Blog from Rachael Harper
About the Author - Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.