New Bedbug Insurance Available for Commercial Policyholders But Not Homeowners
In August 2011, Animal Planet aired “Bedbug Apocalypse,” which explored the resurgent and astonishingly common infestations of the critters. The special featured stories from consumers who had purchased new mattresses only to discover that the bugs were stowaways. One woman’s life was turned upside down when she and her family moved into a new home. I was certainly one of the viewers who fell asleep that evening wondering if I’d wake to discover the tell tale marks.
Though homeowners or renters are left with few options to protect their belongings, commercial entities such as hotels or landlords can now purchase policies that will help defer the costs associated with a large-scale infestations.
Aon Risk Solutions was the first to announce their new insurance product, which would be sold to hotels, landlords, student housing, various businesses, and even regular travelers. Aon formed a strategic alignment with Global Excess Partners, an insurance firm that sells specialty policies, and Terminix, a pest control provider. The three companies began offering their bed bug policy in June 2011 to hotels, landlords, student housing, corporate businesses, and leisure travelers.
The insurance policy would provide coverage for the treatment of bedbugs, and revenue loss experienced due to bedbug infestations. Bedbugs can lead to large expenses when pest control, lost revenue, and claims from those who suffer damages or losses due to them, such as medical expenses, are tallied up. In an interview with the New York Times, an entomologist for the New York State Integrated Pest Management Program stated the average costs incurred from a bed bug infestation is around $5K.
It didn’t take long before more insurance companies began offering bed bug insurance, specifically targeting hotel and residential management.
One of them was Professional Liability Insurance Services (PLIS), which developed a product called Bedbug Infestation Recovery Insurance. Their policy even included a crisis management option for clients, allowing them to choose from a variety of vendors to eradicate their infestation. Almost simultaneously, Willis North American began offering their bedbug insurance product as well. The Willis policy included property and liability protection for businesses, and like PLIS, their target demographic was hotels and owners of residential properties. Willis also offers the same choice of vendors through a similar crisis management component, although services were to be provided exclusively by pest control company Orkin.
NSM Insurance Group was one of the last to join the fight against bedbugs. It took a slightly different approach in the conception of their product, calling it “Express Hotel Insurance.”
However, one just need examine news from the last couple of weeks to see that bed bug infestations take up real estate property in places other than hotels or residential properties.
Over the last week alone, bed bug stories scurried across news headlines, including:
-A Florida Salvation Army had to close its doors due to a bedbug infestation WMFE.org, January 13th, 2012
- A Houston women and children’s shelter discovered a bedbug problem MSNBC.MSN.Com, January 20th, 2012
-Several rooms in student housing at the University of Nebraska-Lincoln found bed bugs The Republic Newspaper, January 21, 2012
- Two elementary schools in Adams County, Ohio discovered a bedbug infestation just a few days ago, resulting in the second year they’ve found an infestation The People’s Defender, January 18th, 2012
-Reinhardt University in Waleska, Georgia, unknowingly granted admission to their program…again 11 Alive News, January 19th, 2012
- Two hospitals in Windsor, Canada accidentally admitted bedbugs CBC News, January 3, 2012
Of course, most of these cases were discovered in commercial properties. It left me wondering why insurance companies were not also targeting residential consumers.
During the Animal Planet special, none of those who shared their horror stories mentioned any kind of insurance coverage, regardless of whether they rented or owned their home. It seems as though no insurance company created coverage for damage done by bedbugs in a home.
The unfortunate part of this? Any damage done by bedbugs isn’t covered under personal homeowners and renters insurance policies. According to a Consumer Reports blog entry, homeowners policies will usually not cover bedbug related losses. The majority of insurance companies state that pest control is not a coverage provided for and is seen as more of a maintenance issue. Since maintenance expenses aren’t covered by insurance policies, anyone whose home is suddenly taken over by bedbugs has few options except to pay out of pocket.
That means prevention is almost the only way to avoid losses from bedbugs. Whether you rent or own, you need to educate yourself about bedbugs BEFORE a crisis hits. In April of 2011, The Environmental Protection Agency granted a totally of $550K to spur the creation of bedbug training and education materials aimed at consumers. The EPA’s intent was not only to provide education, but to hopefully spawn more community outreach and programs about bedbugs.
Losses from a bedbug infestation can quickly add up — pest control, personal property losses, hotel expenses, and medical bills. Consumers aren’t giving up without a fight though: some are taking the issue to their representatives and demanding that personal property policies provide bed bug coverage, as least as a supplementary or amendment that could be added.
Renters often face a higher risk of bed bug infestation. Some apartments aren’t properly cleaned after a previous tenant moves out and pest control may not be exercised regularly.
In 2007, when New York set up a consumer complaint hotline known as ‘311’, the number of bed bug complaints continued to rise each year. Finally the number of complaints peaked in 2010–the 311 hotline reported 31,719 complaints about bed bug infestation. Renters in a heavily populated city like New York have been faced with growing infestations. New York’s renters have approached the problem with grim persistence and have made some progress: The New York State Assembly passed a Bedbug Disclosure Act in August 2010, which requires landlords to reveal to prospective tenants if a bedbug infestation has occurred in the property before.
Although New York is still considering passing a bed bug insurance law, experts from the Institute of Real Estate Management in New York state that although bed bug infestations remain an issue, the reported cases of bedbugs have declined. They said this is most likely due to the large grants and other education programs which educate consumers about prevention.
Chuck Achilles, the Chief Legislative and Research Officer at the Institute of Real Estate Management in New York, talked about the problem at the 2011 National Association of Realtors conference in Anaheim, CA. He stated that the new education programs, combined with the distribution of the Department of Housing and Urban Development’s “Guidelines on Bed Bug Control” has caused residents to become, as he stated, “overly cautious.”
Twenty-eight states have now passed or are considering new bed bug legislation. New York is even considering two new laws: one for new insurance laws for personal insurance lines and to provide tax credits to those who have lost any personal property due to bed bug removal efforts.
Consumers, meanwhile, are left with their only weapon: prevention.
The National Pest Management Association, Inc., provides the following prevention tips:
*Always vacuum suitcases when you return from vacation and have stayed at a hotel or other lodging.
*Regularly check your bed sheets for small blood spots, a regular sign of bed bug bites
*Take a large plastic trashbag or other plastic cover with you to keep your suitcase in when traveling
*Always keep a small flashlight handy to aid in visual inspections
*Never bring second-hand furniture into your home without first inspecting it for bedbugs. Never bring home a second-hand mattress, and avoid any second-hand ‘upholstered’ furniture. If you do obtain upholstered furniture or a bed, consider having a pest control professional do an inspection since they’re better trained to spot signs of infestation.
*Do regular inspections for bed bugs where pets sleep
*If you suspect the presence of bed bugs, play it safe and seek professional pest control, as bed bugs can be very difficult to confirm.
-Desiree Baughman, InsuranceQuotes.org
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