With 2020 more than halfway through, this year’s National Insurance Awareness Day (June 28) marks a good opportunity to take stock of the risks we have faced so far, and to evaluate what we may be facing for the rest of the year.
And while 2020 has thrown many unknowable risks at us already, there are some areas that we can plan for and that are worth looking at as we pause to catch our breath. This follow-up piece to the State of Coronavirus and Insurance Report aims to examine many of those emerging risks.
Coronavirus – Take Two?
Nobody wants to think that the coronavirus is going to spring back into the forefront of our national dialogue now that we are getting back to business and thinking about returning to school in the fall, but the experts say that while it is fine to be hopeful, we really need to be prepared.
The frontline insurance product people need to think about when it comes to COVID-19 is health insurance.
Nearly half of the country is covered by employer-sponsored health insurance. Another 34% are covered by government-funded Medicare or Medicaid. If you are in that population, then rest assured — your policy includes coverage for coronavirus treatments and will continue to do so under the terms of your existing policy.
Unfortunately, another reality of the coronavirus is that tens of thousands of people have lost their employer-provided insurance due to layoffs or reduced hours.
In those cases, people can take advantage of the special open enrollment period for the state Affordable Care Act Marketplace-based plans. And they may be newly eligible for Medicaid.
If a second wave of coronavirus shuts down businesses again, many business owners will be looking to the business interruption insurance portions of their business liability policies. Unfortunately, since the pandemic doesn’t cause physical damage to their businesses, many of those business interruption lines will not kick in. Many businesses and states have taken issue with that policy language, and many are suing their insurers to compel them to cover it anyway, but there may be years of litigation before there is any resolution to those cases.
In the case of life insurance, if you already have a policy, that policy will cover you in case the policyholder dies of coronavirus.
Things get trickier if you are shopping for a new life insurance policy, though.
Insurers are now instituting many new steps that perspective policyholders have to take. One of the most prominent is in the case of travel restrictions. If someone is shopping for a new policy but has recently traveled to an international coronavirus hotspot, or is planning to do so in the near future, the company may put a waiting period on that new policy until after they have returned and gotten a clean bill of health.
Another difference is in the so-called paramedical exams people have to take before their policy is rated. In most states, travel restrictions and stay at home orders have been lifted, but new socially distant restrictions have been put on those exams. And if there is another wave and more stay at home orders emerge, those exams may halt again, putting a temporary pause on new policies. And if someone has tested positive or been exposed to coronavirus, most life insurers are going to institute a waiting period until after they recover until those policies kick in.
Travel and Auto
Historically, summer meant travel. But, with coronavirus, many travel plans have either gone out the window or are up in the air. Still, many people are determined to travel despite the risk.
If you are planning to fly to your destination, or if you are planning to put a large deposit down on a resort or rental property, trip cancelation insurance can be a good investment.
But when you are thinking about trip cancelation insurance, a few things are good to keep in mind. First, make sure you buy it when you book your trip. Often the clock starts ticking as soon as you put money down, and many policies will not be available even a week after you book the trip, so be thinking about it up front.
Trip cancelation insurance is great if your flight is canceled, or if civil authorities shut down travel, or even if you get sick and can’t travel. But read the fine print, because many, if not most policies now have coronavirus exclusions. So, make sure to ask before putting money down.
And keep in mind that trip cancelation typically only covers you if the cancelation is out of your control – not because you are scared to travel. If you make the choice not to travel, you will only be covered if you opted for the more expensive, and less generous “cancel for any reason” policies. They are available, but make sure you understand what you are buying before you sign.
And once you get to your vacation destination, beware of using those trendy rented motorized bikes or scooters. While they are fun and convenient, you really need to be wary about the liability. Most coverage provided by the rental companies protect them in case of an accident, but you are often left out on your own. That is because typical auto policies exclude two-wheeled modes of transportation unless you have a motorcycle rider, and liability policies attached to your homeowner’s plan exclude motorized vehicles. Really, an umbrella liability policy is the only way to be sure you will be covered if you crash that motorized scooter into a street vendor.
When it comes to auto insurance policies this summer, look for discounts and rebates that many of the companies are offering since people are traveling less during lockdowns and stay at home orders. Most companies kicked back at least 10% of the monthly premiums during lockdown, and some gave as much as 25% back to policyholders.
And, if you are traveling less and spending less time in your cars and logging fewer miles, now might be a good time to ask your insurer about their telematic devices. These are little devices that plug into the diagnostic port of your vehicle and that log things like miles driven, top speed, and aggressive braking. If you are on the road less, you may get a premium discount because you are less likely to slam on your brakes and gun it at a green light.
If a road trip is in your future, make sure you are covered for roadside assistance. Many insurance companies offer that as an inexpensive add on to your comprehensive policy. If you are uncomfortable making claims with your insurer for things like blown out tires, then make sure to shop it from an auto club or other provider. But be sure to consider it, because it is such a nice thing to have when you are stranded on a rural highway with a minivan full of kids and no spare tire.
And if a semi kicks up a rock and chips your windshield during that road trip, be sure to check your comprehensive insurance policy, because many insurers will do glass repairs for no deductible. But even if you have to come out of pocket, get that chip fixed before it makes a spiderweb across your windshield and ruins your vision.
Summer means many other things, too — from hurricane and wildfire seasons to fireworks, backyard barbecues, and pool parties. To an insurance expert, every one of those words sent chills down their spines.
When it comes to hurricanes and wildfires, make sure to check with your homeowner’s insurance agent. While those are considered covered risks in most cases, there may be exclusions or special
deductibles on your policy that you should know about in advance rather than getting a nasty surprise after disaster strikes.
And keep in mind, floods are never covered by your homeowner’s policy. You must get a separate flood policy through the federal government. And really, everyone, regardless of where they live should have one. They are relatively inexpensive for the coverage they give, and floods can bring catastrophic damage.
With those other things, make sure you are using your common sense this summer. Obviously if you plan to use fireworks, check with the laws in your community and only use them in safe and responsible ways. Sure, accidents happen, but if you are using illegal fireworks and they catch your shed on fire, your homeowner’s policy may not come to your rescue.
In the cases of your pool, be extra cautious. That is because pools are considered “attractive nuisances” meaning that if you own a pool, you are responsible for injuries that result from people who use them — with your permission or not.
So, make sure you have a good fence and lock to keep unwanted guests out, and then manage your invited guests appropriately.
But keep in mind that while your homeowner’s policy will protect you from liability if someone is injured, the personal liability policy typically limits you to $100,000 in coverage, which might not be enough if disaster strikes. In that case, a separate umbrella liability policy would be a good idea, covering you for an additional $1 million in liability.
Umbrella policies are a good idea, too, if you plan on having renovations made to your home. Sure, you should ensure that your contractors and their subcontractors all have their own liability policies, but if someone is trimming your tree and falls out of the bucket truck, you are going to want to be protected if they turn around and sue you.
If your plans take you onto the water, check your homeowner’s policy for boater’s coverage. Some offer it, but some do not. So, if you are going to be using a watercraft, you may need a separate boater’s policy as well.
And during that backyard barbecue, know that in some states you can be held responsible for overserving your guests alcohol. So, if they drink, don’t let them drive.
We all want to get back to our normal lives, but there are still risks out there. As we move toward the second half of the year, do it intelligently. Think about what keeps you up at night, and try to find ways to mitigate those risks. And if something is out of your control, think about using insurance to manage that risk.
The world is changing quickly. Government programs are being rolled out to help with the recover, so keep an eye on what you might qualify for. But most of all, be careful as you venture back to a world that we hope will be more normal moving forward.