When most people think of homeowner’s insurance, they think of protection against theft, fire or natural disaster, and they think of a loss in terms of damage to the home or its contents. As such, they mistakenly assume that the value of their property and possessions is the only factor that determines the cost of their coverage. However, homeowner’s insurance policies cover additional perils, such as liability. In addition, insurance companies deal in risks, not absolute values. Therefore, they assess the likelihood that you will suffer a loss when they calculate the cost of your policy.
Here are four factors that many people do not realize can have a major impact on the cost of a homeowner’s policy, and possibly prevent you from getting coverage at all.
Pets can Affect Homeowner’s Insurance Rates
Believe it or not, your pet can affect your ability to get homeowner’s insurance, as well as how much it will cost you. Most insurance companies have a list of dogs for which they will not provide liability coverage or will charge extra. Dogs on this list tend to be large, powerful animals capable of causing serious injury or breeds with a higher than average number of biting incidents. Breeds often on the “do not insure” list include:
* German shepherd
* Alaskan Malamute
* Chow Chow
* Presa Canario
* Siberian Husky
* Wolf hybrid
It is completely legal for insurers to refuse to insure you, or even drop existing coverage, if your dog is on their list, even if your particular animal has no history of aggressive behavior. Some states are considering legislation to make such “breed profiling” illegal, but until then, be aware that your insurance company may not love your dog as much as you do.
Many exotic animals, such as large snakes or alligators are also excluded from liability coverage.
Previous Claims on the Home
When you apply for home insurance, the company will investigate claims made by both you and the seller in the previous seven years. If either of you has a history of claims, you may be denied coverage, or may have to pay more for it.
This may be true even if the homeowner never actually filed a claim, but just asked about it and then fixed it himself. This is because insurers open a file every time a customer even asks about a possible loss. This entry then goes into the Comprehensive Loss Underwriting Exchange (CLUE) database, which insurers use to investigate claims histories. Even if the file was closed without a payout, it will show up in the database as a claim.
Only insurers and the homeowner can order CLUE reports, but you can request that the owner of a home you are interested in get one as a condition of the sale. This way you can be alert to possible problems with getting insurance on your new home.
The proximity of a home to the nearest fire station, as well as the quality of the fire department, can affect the price of homeowner’s insurance. The closer a house is to the station, the faster the response should be, resulting in less damage. Companies also consider paid fire departments better than volunteer departments and so may offer a discount if your community has a paid department.
Installing safety features in your home may qualify you for discounts between 5 and 20 percent. In general, you will get the biggest discount for a monitored burglar and fire alarm system. When a sensor is activated on one of these systems, it automatically calls your monitoring company, who then sends the appropriate emergency personnel to your home. This offers the best protection, which is why it gets the best rate.
An unmonitored system uses an audible alarm, and possibly flashing lights, to scare off intruders. Simpler security measures, like deadbolts, smoke detectors or window locks, typically qualify for about a 5 percent discount.
Some of these factors are out of your control – for example, a previous homeowner’s claims history – but if you know about them, you can at least avoid unpleasant surprises. Also, investigating your insurer’s policy on dogs before you bring home that adorable Rottweiler puppy can help you ensure you remain covered. Knowing what factors insurance companies take into account when evaluating a homeowner’s potential cost to them can put you in the driver’s seat when renewing or shopping for a policy.