How the Pandemic Could Affect Home Insurance
COVID-19 has turned so many facets of our lives upside down. From the way we do business, to how we use our homes and cars, to how we live our lives – it seems like the pandemic has had an effect on anything and everything in our world. While some of these shifts will be temporary, in many cases the changes that we are seeing will be permanent and will affect how things will operate moving forward.
As in all industries, insurance has been greatly affected.
One question in the realm of insurance is how this new reality will affect home insurance. Let’s take a look at some of the potential repercussions of the pandemic on insuring your home or property.
Usage based insurance (UBI)
Most of us are familiar with usage based insurance when it comes to auto insurance. But we’ve probably never thought about it in terms of insuring our house. Well, with the pandemic keeping people at home considerably more than usual, and with many businesses maintaining work from home business models moving forward, how and how much we use our homes has changed. And this has repercussions. There is an increased likelihood of claims when people are home more, as the house and its infrastructure see more use and wear.
For example, Ontario’s fire marshal reported that there was a 65% increase in fire-related deaths from last year (2019) between January 1st and May 4th. An increase in residential fires was also reported (source: Canadian Underwriter).
Some industry experts are now pointing to UBI as a potential tool for setting home insurance rates. With the advent of smart home technology, insurers could have access to the data needed for setting rates under a usage based model, such as insight into how much the home is occupied.
Flood risk considerations
The economic and financial repercussions of COVID-19 have been felt across the board, for businesses and individuals. The same applies to cities and municipalities. One concern with budgets being squeezed tight and governments looking to cut costs wherever they can is that certain projects will be unable to move ahead. Municipalities across Ontario are laying off staff and looking at service cuts. For example, the mayor of Mississauga reported that COVID-19 is costing her city $20 million per month while the mayor of the City of Toronto cited cost pressures of $1.5 billion due the pandemic (source: Canadian Underwriter).
One area of concern is any public works projects that were slated to address flood mitigation in Ontario. Flooding is a major consideration in our province and a major source of home insurance claims. And while such flood mitigation projects are undoubtedly important, they simply may not be possible with the aforementioned financial pressure.
Want to learn more about flooding and home insurance? Check out our posts…
- 9 Steps to Help Prevent Basement Flooding
- Stepping up Flood Resilience in Ontario
- Prepare Your Home and Property for Flood Season
While the effects of the pandemic are far-reaching and widespread, only time will tell what changes will be permanent mainstays in our lives.
- There’s UBI for auto, could it work for home? – Canadian Underwriter
- How basement flood risk could rise with pandemic-induced municipal funding crunch – Canadian Underwriter
Image source: FreeDigitalPhotos.net | Stuart Miles