Wednesday, February 5, 2014 | Category: ,

While most people buy home insurance to protect property from damage, liabilities from accidents on your property are often what drive up your insurance rate.  “Legal liability can be more costly to home insurers than property damage,“ says Loretta Worters, vice president of the Insurance Information Institute.  “People sue for millions of dollars for minor injuries.  Companies are not going to walk away from the business because you have a dog or pool, but they’ll charge you more.”  Unforeseen or overlooked risks can drive up premiums or even lead to a rejection.  Here are some of the biggest rate-boosters…

  • Beware of dog – According to the Centers for Disease Control and Prevention, more than 4.7 million people a year are bitten by dogs.  More than 50% of dog bites occur on the dog owner’s property, and they account for one-third of all homeowners insurance liability claims.  Consequently, some insurers don’t like aggressive breeds of dogs and may reject clients or charge more if they own pit bulls and Rottweillers.  Others will insist on policies the exclude dog-bite coverage.  If your dog has a history of violence, expect higher premiums.  One potential way to reduce rates:  Get Rex some obedience training.
  • Guarding the pool –  Drowning is the leading cause of fatal injury for children ages one to four.  Insurers will cover homes with pools, but often at higher rates and with limited liability on their end.  They will want to make sure the pool complies with local regulations and safety standards.  “We require fences for homeowners with pools,” says Holly Anderson, a State Farm spokeswoman.  The CDC estimates that more than half of drowning deaths involving young children could have been prevented by fencing that securely separates the pool from the house and yard.  Homeowners can be liable for injuries that occur to strangers who use their pool without their permission.
  • Trampolines – Trampolines cause more than 100,000 emergency-room visits a year, according to the Consumer Product Safety Commission.  Because the devices have become such a headache, insurers sometimes refuse to cover properties that have them or place specific “trampoline exclusion clauses” in policies to address liability.  To get coverage for that liability, you will pay more.  The insurer may require you to take safety measures such as covering trampoline springs with padding and placing the trampoline at a distance from trees and buildings.
  • Treehouses – According to the National Safety Council, falls account for 26% of all accidental injuries and deaths in the home.  Every day, approximately 8,000 children are treated in U.S. emergency rooms for fall-related injuries; that totals nearly 2.8 million children each year.  Treehouses can be primary culprits because of their height.  Some insurers have treehouse exclusion clauses or reject applicants if they consider a treehouse too high or poorly maintained.  Expect to pay more to cover one for any liabilities.
  • Guns – Living in a home that contains guns increases the risk of homicide by more than 40%, according to the New England Journal of Medicine.  Insurers will generally cover gun owners, with caveats.  Whether you have used a weapon in self-defense, with criminal intent or by accident will obviously play a big role in how much liability an insurer will assume.  Insurers want to know that guns are property secured, have safety locks and are kept out of the reach of children.  Failure to disclose that you have a firearm could lead to an insurer trying to deny your claims in the event of an accident.
  • Big-ticket jewelry – “Standard homeowners and renters insurance policies include coverage for personal items such as jewelry and other valuables.” Worters says.  “However, many policies limit the dollar amount for the theft of valuable personal possessions such as jewelry, furs, and precious stones to $1,000 to $2,000.”  That wouldn’t match the cost of most engagement rings today.  Covering your most valuable jewelry for theft and loss will increase your home-insurance premiums and require both an appraisal of the property and policy riders detailing both the value and nature of the jewelry you want covered.
  • Home businesses –  The typical homeowners insurance policy covers a maximum of $2,500 for business equipment in the home, according to the Insurance Information Institute.  It usually doesn’t cover business-related liability if a customer or supplier is injured on your property.  “To cover a home business definitely adds to the premium, due to the increased chance of loss, both from a property and liability point of view.” Anderson says.  “In many cases, we recommend such a policy through our business lines, which provides much broader coverage than a basic homeowners policy.”  If you don’t notify your insurer of your business’s existence and an accident occurs, chances are you won’t be covered.
  • Heating fires – More than one-third of Americans use wood-burning stoves, fireplaces and other fuel-fired appliances as primary sources of heat, according to the U.S. Fire Administration.  Heating fires account for 36% of residential home fires in rural areas every year.  Before installing a wood stove or fireplace, notify your insurer.  Some insurers may require proof of certification indicating that a stove or fireplace was installed properly.  Without that, premiums can increase.  Stoves must also comply with local building codes.  Failure to notify your insurer of the installation could lead to a voided policy should a fire occur.
  • Sewer backup –  The nation’s 500,000-plus miles of sewer lines are, on average more than 30 years old.  The Civil Engineering Research Foundation reports that the number of backed-up sewers is increasing at a rate of about 3% annually.  Unfortunately, sewage backups- just like floods- are not covered by standard homeowners insurance policies, although the damage from one can amount to thousands of dollars.  Coverage will increase your premiums.
  • Zip lines – Backyard zip lines- cables suspended in midair for people to slide across- have become increasingly popular and can be purchased for as little as $150.  These are not the zip lines you find at resorts, but smaller ones that typically run from 100 feet to 400 feet.  Injuries from one can be life-threatening if it has been strung high enough from the ground.  As with treehouses, insurers look askance at zip lines because of the risk that someone will be injured; they want you to disclose if you have one and may then exclude it from your policy.
  • Exotic pets – According to the Captive Wild Animal Protection Coalition, more than 10,000 big cats, 8.8 million reptiles and 3,000 apes are in private hands in the U.S.  Whether you have a chimp in your garage or a fondness for tarantulas, chances are that your insurer will want nothing to do with it.  Expect exclusions that don’t cover the creature in the house and a separate policy to cover potential liabilities.  You may be able to buy a separate exotic-pet insurance policy.

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