Insurers sit back and wait, legislators consider mandatory coverage
It can cost $50,000 to exorcise bedbugs from an apartment building. A 217-unit co-op in New York paid $250,000. And then, more bugs show up and the cycle begins anew.
The financial cost of remediation of this epidemic is as frightening as finding the tiny creatures in a person’s bed. Unfortunately for landlords, this clean-up cost in generally not insurable. Most insurance policies, including renters insurance, either specifically exempt bug infestations, or consider pest removal a maintenance item rather than an accident. However, medical expenses or damages from lawsuits may be covered in a liability policy – but that is disputed by some insurance carriers.
While bedbugs generally don’t cause physical harm like disease, there is no denying the “yuck-factor” when it comes to tenants who find the bugs or who have to slather on anti-itch cream for a few days. To make matters worse, these little nuisances are incredibly adept at hiding – they can disappear for a year or more in minuscule cracks and floorboards, and few pesticides on the market actually do them in. To attract bedbugs, all a tenant has to do is go to the movies, travel, or spend a night in a hotel room, and the bugs stowaway undetected in clothing or suitcases ready to make their new home in rugs, bedding or upholstered furniture. Subject to wanderlust, they will walk remarkable distances into other units and common areas, often through carpeting. A health inspector reported that bedbugs came home with her in her briefcase.
In January, New York State’s Legislature will consider a law requiring insurance companies to provide bedbug insurance for property owners that will cover the costs of bedbug remediation. If it passes, this legislation will undoubtedly become the model in other states, especially those hit hard with infestations like California and Ohio.
Not surprisingly, insurance carriers are balking at the idea of mandatory coverage. It won’t surprise anyone if the rates are very high, but coverage still may be worth considering because, unlike other pests, the extent of any given bedbug infestation – and the damage it may cause, is unpredictable.
In the meantime, many landlords have stepped up pest inspections to stave off widespread infestations. One particularly successful method of inspection is the use of a bug-sniffing dog that can point to the first sign of these loathsome pests so quick remediation can follow: fumigation along with steam-cleaning and hot-water laundry. It also helps if tenants keep cuddly items like clothing off of floors, and wrap their storage items in plastic.
American Apartment Owners Association offers discounts on products and services for landlords related to your commercial housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.