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Homeowners hit by pandemic may get relief from property taxes, insurance

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With millions of homeowners in forbearance on their mortgages due to job loss during the pandemic, some people are falling behind on other costs associated with homeownership, like property taxes and insurance.

For many people affected by COVID-19, the anxiety of affording their bills has increased. According to TransUnion’s latest survey on the financial impact of COVID-19 on consumers, conducted at the end of June, 55 percent of respondents said their finances have been negatively affected during the pandemic. Some 74 percent said they were worried about being able to pay their bills and loans.

The good news is that beyond mortgage forbearance, there are relief options for other costs associated with homeownership.

Property tax relief for homeowners

Property taxes vary greatly by state and even county; of course, they’re relative to how much a person is earning and their financial resources. For people hit financially by the pandemic, a $500 tax bill can be too much.

State leaders have recognized this hardship and created property tax relief programs in response.

For example, Idaho Gov. Brad Little unveiled a $200 million property tax relief program to help homeowners that would use the state’s $1 billion in federal coronavirus aid under the CARES Act. One of the plan’s provisions is to keep 2021 total property tax collections at this year’s level, except for new construction, which means giving up the state’s 3 percent allowable annual increase.

“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,” 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.”

In some states, like Pennsylvania, property tax relief is handled on the local level. In Erie, homeowners are getting a time extension to pay taxes, which are now due on December 31, instead of June 30. Additionally, all Erie homeowners will qualify for the early-pay discount of 2 percent if they pay their taxes by the end of the year.

Homeowners who can’t afford their property tax bill should contact their local tax assessor to get the latest information on relief available to them.  Programs may not be widely advertised, but help might still be available. The worst course of action is to ignore your tax bill, which could lead to monthly interest charges and even foreclosure, depending on your jurisdiction.

Homeowners insurance payment relief

The average annual homeowners insurance premium is about $1,200, according to data from the Insurance Information Institute. The most expensive states for homeowners insurance are Louisiana ($1,967), Texas ($1,937), Florida ($1,918), Oklahoma ($1,875) and Kansas ($1,548).

Some states and insurance companies have recognized the ongoing need for relief among consumers across the U.S. In California, Insurance Commissioner Ricardo Lara extended a notice, originally issued on April 14, asking insurance companies to provide their policyholders with a 60-day grace period to pay their premiums until July 14, 2020. That order has not been extended.

“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 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.”

Similarly, Oregon issued insurance relief orders through June 22, but stipulated that residents can file for extensions in 30-day increments “as needed.” These orders require insurance companies to offer a grace period to past-due premiums as well as pay claims for any covered losses during the grace period. They also must extend deadlines for reporting claims.

Along with states, some insurance companies have relief programs in places to help homeowners struggling with their insurance payments. Liberty Mutual, for example, put a temporary moratorium on home coverage cancellations due to non-payment.

While some insurance companies might not have a formal policy in place, homeowners hit by COVID-19 should contact their insurer to find out what options are available to them.

If you stop paying your insurance, that lapse in coverage can be reported to other insurance companies, which could lead to a higher premium. Additionally, your mortgage lender will probably be notified which could lead them to get insurance on your behalf, also known as force-placed insurance.

Force-placed insurance is typically more expensive than regular property insurance and usually offers less coverage, so it’s a lose-lose for homeowners. If this happens, be sure to shop around for insurance as soon as possible.

Featured image by kate_sept2004 of Getty Images.

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Written by
Natalie Campisi
Mortgage reporter
Natalie Campisi is a former mortgage reporter at Bankrate.