Homeowners Insurance and Tax Relief During the COVID-19 Crisis

22 Jun

According to the most recent data, roughly 4.75 million homeowners are in forbearance and more than 41 million Americans have filed for unemployment which makes it hard for many homeowners to keep up with some expenses related to their home such as property taxes and homeowner insurance. 

All of the uncertainly has led to increased anxiety amount consumers. According to a survey done by TransUnion on the financial impact of COVID-19 on consumers, roughly 70 percent of respondents expressed concern about how they would pay their bills and loans. 

There are a few relief options available to homeowners that go beyond mortgage forbearance. Let’s have a look at a couple of options that could help save you some money during the COVID-19 crisis.

Property Tax Relief

Property taxes can vary depending on the state and county your live in but if you have recently lost your job or seen your pay cut, even a small increase in your tax bill could be financially devastating. Fortunately, many state leaders have noticed this hardship and are putting tax relief programs into place.

Recently, Idaho Governor Brad Little revealed a $200 million property tax relief program to help homeowners deal with the financial fallout from the pandemic. The program uses $1 billion in federal aid under the CARES act. The goal of the plan is to keep 2021 property tax collections at this year’s level, with an exception for new construction. 

“Our focus is to support our communities and our police, fire, and EMS personnel and ensure there are no reductions in public safety during these unprecedented challenges,” Governor Little said in a statement. “I appreciate the cities and counties working with us to ensure the resulting budget savings are given back to the people of Idaho in the form of property tax relief rather than backfilling local government budgets.”

New Hampshire is also setting up a program to help homeowners struggling with bills. Their program is called the Low & Moderate Income Homeowners Property Tax Relief program. Homeowners have until June 30th to apply, the amount of relief being offered varies depending on factors such as property value, tax rates and household income. 

Other states may be offering property tax relief on a more local level. Officials in Erie Pennsylvania are giving homeowners an extension to pay property taxes, moving the due date to December 31 from June 30th. Erie is also offering a discount of 2 percent to homeowners who pay their taxes by the end of the year. 

These are just a few examples and as the pandemic continues, it is likely that more states and counties will be offering relief to homeowners. If you are struggling to make ends meet, consider contacting your local tax assessor to get the latest information on relief available to you.  It is very possible that tax relief programs are in place but may not be widely advertised. 

Homeowners Insurance Relief

According to the Insurance Information Institute, the average homeowner insurance premium is roughly $1,200 a year but it can be dramatically higher in many states. As an example, residents of Louisiana fork up $1,967 a year for homeowners insurance which is the highest rate in the nation while homeowners in Florida pay $1,918 annually. 

There have been a number of states and insurance companies that have recognized the need to offer some kind of relief to homeowners. As an example, the California, Insurance Commissioner, Ricardo Lara recently extended a notice that was originally issued on April 14th that asks insurance companies to offer their policyholders a 60-day grace period to pay their premiums until July 14, 2020.

“Consumers who have lost their jobs or businesses due to this crisis deserve flexibility in paying their premiums, just like any other,” Commissioner Lara said in a recent statement. “I am asking insurance companies to be mindful of the revenue stream Californians have consistently provided to insurers over the years, stand with their customers in this crisis and extend grace periods an additional 60 days.”

Oregon did a similar thing, issuing insurance relief orders that go through June 22nd. Residents can file for 30-day extension as needed. The orders require insurance companies to offer a grace period for any past due premiums and extend deadlines for filing claims. 

Insurance companies are putting their own programs in place, even before being ordered to do so by state officials. Liberty Mutual is put a temporary moratorium on cancelling homeowner insurance policies due to non-payment from March 23 through June 15, 2020.

Your insurance company may offer payment relief as well, it is best to contact your insurance company if you are struggling to cover their bills to see if they are offering any payment relief options. 

You should never let your homeowners insurance lapse due to non-payment if at all possible. If your coverage lapses, in addition to your home being unprotected, your lapse will end up on your insurance record, making future insurance more expensive. In addition, if you have a loan on your home your mortgage lender will be notified of the lapse and will put insurance in place on your behalf, this is called forced placed insurance and it tends to be very expensive. 

Tips to Lower Your Premium

If you are having difficulty paying your homeowners premium, consider these tips to help lower your costs:

  • Shop Around: The best way to lower your premium is to shop your home insurance coverage. Insurers rate risk differently so premiums can vary dramatically. Get quotes from at least five different insurance companies and make sure you are comparing apples to apples in regard to coverage levels and deductibles. 
  • Raise Your Deductible: The higher your deductible, the lower your premium will be. If you can afford to double your deductible this should drive down your premium a fair amount. Always choose a deductible that you can afford in the event you have to make a claim. 
  • Add a Security System: While this may be a tough option if you are already struggling to cover your bills, most insurers offer a discount for a monitored security system. If you can afford to add a security system it may be a good idea, however, check with your insurance company beforehand regarding the discount amount. 

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