Homeowners Insurance

Homeowners insurance provides protection against financial losses resulting from damage or destruction of the home as well as loss of the home’s contents or use and limited accidental liability coverage.  Though it is a legal requirement that buyers purchase insurance for any home that is backed by a mortgage, many homeowners are unaware of the major factors that affect their coverage.


When shopping for a homeowners policy, one of the first questions dog owner’s should ask is whether the company will insure a home with a dog.  The second question should be whether there will be an additional charge.  Dog bites are one of the largest causes of homeowner’s claims, which automatically places insurance companies on the defensive.  Certain dog breeds and their history of aggression are the two factors that largely determine insurability and premiums.

While there is no national list of uninsurable dogs, a few breeds always seem to land at the top of the banned list such as Wolf-hybrids, Pit bulls, Rottweilers, Doberman pinschers, Chows and German shepherds. These breeds are frequently trained to be aggressive creating a higher claims experience for insurance companies.

Previous Claims

In the technical age, it seems that everything is tracked by someone.  In 1992, when the Comprehensive Loss Underwriting Exchange or CLUE was launched, this also became true of homeowner’s insurance claims.  Offering loss history reports detailing claims within the past seven years to insurance companies, CLUE has become a significant factor affecting premiums and coverage. 

Knowing how these reports are used can help both homeowners and potential buyers to protect themselves.  As only current homeowners can request the report, buyers should stipulate that the seller provide a copy of the CLUE report before signing closing documents.  If the report shows a number of claims, it should be a warning to the potential buyer that either the home may not have been well cared for or that their chances of obtaining insurance on the home following purchase may be extremely difficult.

Current homeowners should be wary of contacting their insurance agent when there is a potential claim situation.  Even if the call is only to confirm the terms of coverage and the homeowner ends up paying for the repair out of pocket, most companies will open a claim.  If the claim is later closed and the insurance company makes no payment, the event is still reported on the CLUE report.  This can cause current premiums to increase or the policy to be cancelled.  Unless the damage is “an act of God” and approximately three times the policy deductible, homeowners are typically advised to avoid filing a claim.

Fire Stations

The Insurance Services Organization, or ISO, created a system for rating the probability of a home being damaged or destroyed by fire. The rating is on a scale of 1 to 10 with one being the safest.  Home insurance premiums are greatly affected by the calculated risk of either of these events occurring.  A home that is located in close proximity to a fire station and water source will receive a better rating than a home that is situated in an isolated location with few sources of water.  Insurance premiums reflect this rating.  Homeowners should also check with insurance companies about available discounts related to fire suppression such as sprinkler systems and fire extinguishers.

Alarm Systems

It is common practice for insurance companies to provide some amount of discount for various home security precautions.  While a small discount of 5% may be allowed for installing a dead bolt on a door, larger discounts can often be obtained for comprehensive systems. 

Technological advances allow home security systems to be as sophisticated as a homeowner chooses.  Motion sensors that monitor the perimeter of a home including all doors and windows is often paired with an off-site monitoring company that notifies local police if activated.  Weight sensors, carbon monoxide and smoke monitors are all types of alarm systems that should be discussed with an insurance company before agreeing to purchase coverage.

Though legally required to insure the home, a host of options regarding insurance companies and coverage that affect monthly premiums are left to the homeowner’s discretion. Unfortunately, the first time many homeowners read their insurance policy is when they are contemplating filing a claim.  Researching all major factors in advance and making time to shop various insurance companies can make a world of difference in both monthly premiums and claim situations.