By Michelle Wagner | Outer Banks Voice on March 20, 2020
Issues over travel insurance remain murky
Dare County’s March 17 restrictions on visitor access left vacation rental brokers in murky waters when it came to tenant inquiries regarding refunds and cancellations due to the COVID-19 crisis. But a March 19 letter from the North Carolina Real Estate Commission’s (NCREC) legal counsel sought to clarify that, stating that with the exception of certain statutory fees, the state’s Vacation Rental Act requires brokers to refund any and all funds when access to vacation rental homes is obstructed.
“In the current situation, landlords of vacation rental units in the affected areas cannot provide access to the units for the tenants who have pending reservations,” wrote NCREC legal counsel Janet Thoren in the letter to Commission Chairman Jeffery Malarney. “As a consequence, we have determined that when access to the property cannot be provided, we find that [the Vacation Rental Act] requires that the landlord and broker refund all monies paid by the tenant.”
The NCREC’s position came just days after the Dare County Control Group decided to restrict access to visitors, with Hyde and Currituck counties soon following suit in an effort to contain the spread of COVID-19. In all three counties, visitor restrictions did not include evacuation orders for those who were already here.
Following the NCREC’s clarification, Outer Banks Association of Realtors Chief Executive Officer Willo Kelly told the Voice in an email, “Upon receipt of the letter from the NCREC, we quickly distributed it to our members. We want to ensure our members are compliant with the NC Vacation Rental Act and we thank the NCREC for the clarification regarding access and rental payments.”
Shortly after the restrictions were put in place, Facebook posts and anecdotes came pouring in to local media from visitors who claimed they were being denied refunds from rental agencies. And while protocols for hurricanes and weather-related events have long been in place in regard to travel insurance, that industry was wading into unchartered waters in dealing with the impacts of a pandemic.
NCREC’s Thoren told the Voice that while the commission doesn’t have jurisdiction over vacation rental owners who have already received partial funds for upcoming rentals, she said, “It’s the owner’s responsibility” to return all required funds to the tenant. “The law says they are entitled to a refund.”
Vacation rental agencies have addressed the issue of refunds to varying degrees on their websites – ranging from no mention on some sites to explanations on others. By the evening of March 19, Carolina Designs posted on its site, “We are all concerned about the travel restrictions to the Outer Banks, and everyone’s health and safety during this time. If guests are unable to access their rental home due to the current visitor restrictions to the Outer Banks, and if suitable alternative accommodation dates cannot be found, guests will be refunded in full.”
It continued, “These refunds will be available to guests whose reservation dates are directly impacted by the bridge closure. There is no indication when the Outer Banks will reopen to visitors. We continue to prioritize communication with our March guests and will be in direct communication with guests arriving in the coming weeks and beyond as the situation evolves.”
In a March 18 website post, Hatteras Island’s Midgett Realty stated that it was currently dealing with a 15-day window of reservations certain to be impacted by the current travel restrictions.
“While we understand that folks with confirmed reservations that don’t fall within this window are frustrated and want answers for planning and peace of mind, please understand that we can’t give answers that we don’t have. The travel restriction is the main variable that determines the outlook of your vacation, and as of right now, after the 15-day window, that variable becomes an unknown.”
As for Village Realty OBX, its website noted that it was not currently accepting reservations through April 4. “With the bridge closure announcement from the county having no defined end date, we are using a rolling two-week window to contact our guests. Given that, as of 3/18, guests with\h arrivals through 3/31 have been contacted via email. We are continuing this plan for the coming weeks with respect to this uncertainty,” its website read.
As far as travel insurance goes, Thoren encouraged those with travel insurance to check their policies, but added that she guessed the bulk of the policies have exclusions that would not cover situation such as pandemics. If people have trouble with their travel insurance, she suggested they should contact the North Carolina Department of Insurance.
Department of Insurance Deputy Commissioner for Communications Marla Sink said that insurance companies are dealing with a new and uncertain situation, “But we are continuing to study the issue in light of the current health emergency,” she said.
Some travel insurance policies, she said, have “cancel for any reason” coverage. “This is usually more expensive than normal travel insurance and may have restrictions. Consumers would need to read specifics in policy,” she wrote in an email response to the Voice.
Sink also stated that “a travel insurance policy will not cover the cost of your trip if you want to cancel because you are AFRAID to catch COVID-19. You must be sick for coverage to be triggered.”
The exception to that, she noted, is if you have a policy that covers cancellations for any reason. But with NCREC’s March 19 position on refunds, she added, “The thing with the Outer Banks that is good to know, is you are going to get your money back.”