Home insurance policies may soon carry COVID-19 exclusion

By HUB SmartCoverage Team on November 21st, 2020

Don’t be surprised if you see something new the next time you go to renew your home insurance.

It’s a communicable disease exclusion that protects insurance companies from any claims related to the COVID-19 pandemic, said Amanda Dean, vice-president Atlantic for the Insurance Bureau of Canada.

"Generally, pandemic risk is not an insurable thing, as the insurance industry is unable to provide protection for losses of this nature because there's no way to diversify the risk due to it affecting the entire world at the same time," Dean told CBC recently.

The exclusion reflects changes being made by international reinsurance companies, which primary insurers buy insurance from. Reinsurers have added the exclusion to their agreements with insurers, which means insurers are likely to include it in homeowners’ policies.

"So, what we're seeing is insurance companies starting to make the decision to add that to those home insurance policies," Dean told CBC.

Prevents claims

The exclusion endorsement prevents anyone who contracts COVID-19 at someone's house from making a claim against a home insurance policy.

"We know we're all doing our best to protect ourselves, our neighbours, our friends, and family. But you never know where this is going to creep up. If someone were to contract COVID-19 and pursue litigation, it could get quite, quite costly."

At the time of the CBC interview, only one insurance company had added the communicable disease exclusion to a home insurance renewal policy, but IBC expects more to follow suit.

"Where this is something that's happening with reinsurance companies, it will come down to business decisions with insurers that are selling home policies here in Canada," the Vice President said.

This exclusion is new, and homeowners are advised to speak to their broker about it.

"Like any change at this point in time, it can be a bit unnerving because we've all gone through an awful lot in the past number of months,” Dean said.