Do you own your own home? And, are you concerned about the impact of the COVID-19 pandemic on your homeowner’s insurance policy?
By way of answering these questions, let’s consider the following points
The American Dream: The right of every American to own a house
The American Dream espouses the ethos and ideals of American citizens, including purchasing and owning a home. This dream is achievable through hard work in a society that has a few barriers to anyone irrespective of race, gender, sexual orientation, and religion.
As an aside, if you ever need to file for Chapter 7 bankruptcy, you will be able to keep your home if you are up to date with the monthly mortgage payments.
Homeowner’s insurance: A definition and case study
Investopedia.com defines homeowner’s insurance as a “form of property insurance that covers losses and damages to an individual’s residence, along with furnishings and other assets in the home.”
This policy type essentially covers the following four kinds of incidents: interior damage, exterior damage, personal injuries that occur on the property, as well as the loss or damage of personal belongings in the home.
By way of explaining this concept, let’s consider the following scenario.
Let’ assume that you own a condo in the Tampa Bay area. It is a high-risk hurricane zone; thus, it is essential to ensure that your homeowner’s insurance includes comprehensive home coverage, including damage caused by natural disasters.
Additionally, let’s assume that your condo building was damaged during Hurricane Dorian when it touched down on the Southern Florida coastline in August 2019. You now need to claim for damage done to your condo. For the ease of calculating the financial damage to your condo, let’s assume that the cost to repair both the outside and inside is expected to be as high as $150 000. And, the deductible that you will have to pay when claiming from your insurance company for the repairs to your condo is circa 11% of the total amount claimed. Thus, you will be out of pocket for $16 500.
Homeowner’s insurance and COVID-19
The good news is that the COVID-19 pandemic will not be affected by the COVID-19 pandemic because this virus does not negatively impact property and possessions. On the other hand, you might need to change the exclusions and type of insurance policy if you run your business from home during the lockdown.
One of the unfortunate challenges is that, if you have been furloughed or laid off due to the COVID-19 lockdown, you might not be able to pay the homeowner’s insurance’s monthly premiums. The good news is that many insurance brokers and mortgage brokers are offering payment plans, extensions, and suspensions to cover homeowners who are not currently earning an income.
Final thoughts
The salient point here is that it is essential to speak to your homeowner’s insurance broker should you be in a situation where you can no longer cover the monthly premiums as a result of the COVID-19 pandemic. Do not ignore the situation; otherwise, you will find that insurance brokers might not be as keen to provide an alternate payment option for you.