Are You Covered?
By Mark Morris
Christine Fleury says making alterations to the home — a common sight during the pandemic — could change insurance needs.
Call it the great migration indoors.
When the pandemic first hit, many people were forced to quickly convert their homes into offices, schools, and entertainment centers. Some in the insurance industry predicted this might lead to more homeowners insurance claims. In reality, it didn’t.
Similarly, as people spend more time in their homes, they also depend more on their water, electrical, and heating systems to work. While some insurance claims have been filed due to these systems failing after increased use, the increase has not been notable.
In fact, Christine Fleury, Personal Lines manager at Encharter Insurance in Amherst, said companies have actually seen a decrease in severe claims from homeowners. “As people spend more time at home, they are catching that large loss before it happens.”
Corey Murphy agreed, noting that, because people are home, they are noticing and taking care of seemingly minor problems like leaky gutters.
“As people spend more time at home, they are catching that large loss before it happens.”
“As people pay more attention to fixing the small issues, they prevent the larger problems from ever happening. A little preventive maintenance goes a long way,” the president of First American Insurance Agency in Chicopee noted.
Most homeowners insurance claims are the result of severe weather incidents. When COVID-19 first hit, winter was ending, and warm weather soon followed. Bill Trudeau, executive vice president and partner at HUB International New England in Agawam, said the mild winter this year has helped keep claims down.
“Other than a couple isolated wind events, the weather has behaved itself, and that means claims have tended to be in line with company projections.”
The pandemic has thrown a few wrinkles into the home-insurance picture this year, however.
For instance, many homeowners were motivated to invest in substantial improvements to their homes. Home construction and improvement contractors point directly to being cooped up in the house as the main motivator for people choosing to make improvements to their property.
What impact does all this renovation work have on the homeowners insurance carried on the house? The answer depends on what improvements are made and what kind of coverage is already in place.
Everyone BusinessWest spoke with agreed that, for small or cosmetic improvements, there is no need to contact an insurance agent. Some larger projects, however, may require altering or increasing a home’s coverage.
“Adding square footage to your home, doing a full remodel, or building a garage would all be reasons to consult your agent to make sure you have enough coverage,” Fleury said.
Even if they are not taking on home improvement projects, Trudeau advises people to call their insurance agent at least every couple of years so they understand the coverage that’s in place and whether they may need additional coverage.
“You can work with your agent to run a cost estimator,” Trudeau said. “It’s a software tool that takes the data from your home, including any upgrades, then shows you the current replacement cost if it was all suddenly gone.”
With the lifestyle changes wrought by the pandemic, it’s more important than ever to make sure the home — and everyone in it — are protected. Here are some key factors to consider.
Home Work
While they may not have set foot in the office in months, people who work from home are still protected from on-the-job injuries by workers’ compensation coverage. Office workers tend not to get injured on the job, but the coverage is in place if there is an incident.
“There has never been a distinction between whether employee actions emanate from an office at the company or from an office at the person’s home,” Trudeau said. “Because this coverage is broader in scope, COVID did not force us to make changes to workers’ comp plans.”
Bill Trudeau says claims have been kept in check recently by a mild winter.
It’s not unusual for people working from home to have a computer, monitor, and even a printer that belongs to their employer. Murphy said some jobs may require employees to have additional business assets in the home, so it might be wise to make sure everything is covered. “Most policies will pay a little toward assets being home, but it’s usually a minimal amount.”
With homes serving as business offices and classrooms, more people — and their pets — are home at the same time. According to Trudeau, homeowners’ insurance policies consider any issues with an animal as a “strict liability event,” meaning there is no way to defend the action.
“If someone knocks on your door and your dog bites them, it generally means the insurance company pays the claim,” he explained, adding that, as people acquire more pets, the likelihood of claims increases. Most insurance companies keep a list of dog breeds they will not cover because those breeds have higher incident rates.
“You can work with your agent to run a cost estimator. It’s a software tool that takes the data from your home, including any upgrades, then shows you the current replacement cost if it was all suddenly gone.”
Murphy encourages pet owners to speak with their agent because these restrictions can vary widely among insurers. “Just because one company doesn’t want to cover your breed of dog, check with another company; it’s not a universal list.”
Whether they have pets or not, Fleury advises her clients to carry personal liability coverage, commonly known as an umbrella policy, that supplements both homeowners and auto coverage.
“When we write home and auto policies for a customer, we always recommend buying personal liability coverage as well because it gives you that additional safety net,” she said. A typical umbrella policy costs less than $200 but can provide up to $1 million in additional liability coverage when the limits of homeowners or auto coverage are exceeded.
While dog bites and leaking water pipes are obvious reasons to carry homeowners insurance, it can be much harder to detect a leak when personal data is compromised. A significant increase in identity theft has motivated insurance companies to begin offering identity-theft protection as part of their homeowners policies.
“With everyone at home and increased online activity, it’s more important than ever to safeguard your privacy from someone getting into your system and doing real damage,” Trudeau said.
Apart from identity-theft insurance, he advises everyone to follow best practices such as using multi-factor authentication. For example, when working on an important account online, a code is sent to the user’s personal phone that must be entered to gain access.
As people pay attention to small issues in the home, Corey Murphy says, they can prevent larger issues from ever arising.
When fraudsters accesses online bank accounts, they often add a payee into the account. Trudeau advises customers to check with their bank to make sure it uses multi-factor authentication to prevent an outsider from accessing their accounts and to make sure it’s turned on at home.
“If someone has logged into your computer and they don’t have your phone, they can’t get that code,” he said.
Fleury said her agency includes identity-theft coverage in all its homeowners policies. “We feel it is important insurance and recommend at least $5,000 worth of coverage for identity theft.”
From a Distance
The pandemic has changed the insurance business in other ways. Typically, when a homeowner files an insurance claim, an adjuster will visit the home and walk through to personally inspect the damage. With COVID-19 concerns, that’s happening much less often.
“In some ways, COVID is moving insurance companies along the digital side of things,” Murphy said. “They are allowing homeowners with a claim to submit photos and even have video calls if the insurer is set up for it.”
The trend toward relying on consumer photos rather than a visit by an adjuster follows what’s been happening on the auto-insurance side for some time.
“If someone knocks on your door and your dog bites them, it generally means the insurance company pays the claim.”
“Many auto insurers have created apps where the person making the claim takes a photo of the damage, uploads it for an adjuster to review, and then the payment is processed,” Fleury said.
The move toward more digital interaction is no surprise to Trudeau.
“Long before COVID, people e-mailed pictures and documents to us,” he said. “Companies have simply accelerated the move to modernization by using many tools they already had.”
Murphy likes to remind customers that every insurance company offers something a little different that their competitors. That’s why it’s important to put some thought into selecting a homeowners insurance policy.
“People need to assess what they have, in terms of their house and what’s in it, and then speak with an agent about what needs to be covered,” he said, adding that it’s about matching a person’s situation with the company that can best provide coverage for their needs — especially at a time when those needs, and demands on the home, are still in flux.
