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

Bankrate logo Bankrate 6/15/2020 Natalie Campisi

Some 4.75 million homeowners are in forbearance as of May 26 with more than 41 million Americans filing for unemployment insurance benefits during the pandemic, making it tough for some to keep up with 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 on May 28-29, 70 percent of respondents expressed concern about how they would pay their bills and loans. This was up from 66 percent the month before.

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, but 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, this week 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."

Pennsylvania created a COVID-19 property tax relief program, which extends through July 15. Homeowners have several options to choose from including reduced payment options, flex payments and amendments to current payment programs.

New Hampshire also has a plan to help at-risk homeowners called the Low & Moderate Income Homeowners Property Tax Relief program. The deadline to apply is June 30, and the program was designed to lessen the economic burden of the State Education Property Tax on certain at-risk taxpayers. The relief amount is based on a variety of factors including property value, income and tax rate.

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. These programs may not be widely advertised, but there might be help 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.

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Related video: Many homeowners look to refinance amid pandemic (provided by KTHV-TV)


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.

"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 from March 23 through June 15, 2020.

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.

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