As Bedbugs Multiply, New Insurance Plans Crop Up

Bedbugs are crawling the sheets in hotels, apartment buildings and college dormitories in surging numbers, which has spawned a new enterprise for insurance companies.

The tiny, reddish bugs, ranging to about 7 millimeters, or the size of Lincoln's head on a penny, hide in dark places like vampires during the day and suck human blood at night. Unlike those other blood-thirsty parasites, head lice, bedbugs are extremely hard to wipe out once they infest, and the cost can be very high.

Infestations of any kind — bugs, rats or cockroaches —typically are excluded from commercial property insurance policies. The cost of eradicating pests was a maintenance expense, meaning it was not covered by insurance, up until recently.

Insurers, like most of us, didn't want to get near the bugs.

But increasing pressure from lawmakers to require coverage, along with high demand from hoteliers and property owners to protect themselves from financial loss during an infestation, has created a new market.

Last month, bedbug insurance coverage was offered for the first time by two national brokerage firms, Aon Risk Solutions of Chicago and New York-based Willis North America; and also NSM Insurance Group of Conshohocken, Pa., an insurer.

"You've got legislators in the state of New York Assembly who are trying to make this mandatory that insurance companies do this," said John Lafakis, senior vice president at Willis North America and program manager for the bed bug recovery insurance. "So we figured, 'You know what, we're going to beat everyone to the punch.'"

The brokerage firms are leaping into an area that has exploded after years when bedbugs were rarely reported, seemingly a forgotten annoyance from another era.

"Ten years ago it was considered a minor pest issue," said Greg Gatti, a director at Aon Risk Solutions.

Bedbugs have grabbed headlines as more and more people report the telltale red welts after staying in hotels and living in apartment buildings.

Hotels could spend an average $600 to $800 per room to eradicate bedbugs, according to experts in Connecticut. That says nothing of lost income if an infestation becomes public knowledge — on websites such as bedbugregistry.com, or in the media.

Nutmeg State Plagued

The state office that fields questions from people asking about bedbugs, the Connecticut Agricultural Experiment Station in New Haven, had only two inquiries in 1996. Reports started coming in more regularly in 2003 in all major cities across the state, said Gale E. Ridge, an entomologist who specializes in bedbugs at the experiment station.

Ridge is also chairman of the Connecticut Coalition Against Bed Bugs, which brings together bug researchers, pest control services and other interested parties. She recorded more than 900 reports from people who suspected they had bedbugs in the fiscal year that ended June 30, 2010, and the numbers are double or triple that for the year that ended June 2011.

The insects are now in every corner of the state. "We have a very active population here," Ridge said.

Bedbugs aren't known to spread disease, but they can be an annoyance because of itchy welts from their bites and the loss of sleep they cause, according to the federal Centers for Disease Control and Prevention.

The Connecticut trend mirrors what is happening across the U.S. First, bedbug reports were coming out of larger urban areas. Now, they are more widespread, affecting every town in the state, Ridge said.

Occasionally, a person will mistake Eastern bat bugs (Cimex adjunctus) with bedbugs (Cimex lectularius), which are similar in the way they look and behave. Bat bugs typically signal that bats are living in the eaves or attic.

What's the difference?

Bedbugs are small, flat parasites, retreating by day to hiding places in bed frames, floorboard cracks and other dark corners.