Four Factors Affecting Homeowners Coverage you may not know

When an insurance company considers offering a policy on a home, it takes many different pieces of information into consideration, in order to decide if the home and the person insured is a good risk.  While some things are a given, such as size, age and type of the home, some things taken into consideration before issuing a policy may come as a surprise:

DO YOU OWN A DOG? Being a pet owner can not only raise premiums, in some cases it may even make a home uninsurable.  Homeowners may assume that having a watchdog could discourage thieves and thereby lower the chance of being burglarized, but the risk is much higher that the dog may actually injure an innocent visitor to your home. 

Insurance companies use dog bite statistics when trying to decide the risk in insuring a dog owner and his home.  These stats are compiled yearly by the Center for Disease Control (CDC) from information provided from the medical and law communities.  The CDC estimates that dog bites cost homeowners and insurance companies over $165,000,000 per year in medical and litigation costs.  Over four and a half million people are bitten by dogs each year, and close to 900,000 victims require medical attention due to dog bites yearly. 

While all dogs are considered some sort of risk, the following dogs are generally not insurable:   Akita, Alaskan malamute, Chow chow, Doberman, Pitbull, Rottweiler, and Staffordshire terrier.  Other dogs on the ‘bad dog’ list are German Shepherd, Siberian Husky, Presa Canario. wolf hybrids, Boxer, Rhodesian Ridgeback and Bernese mountain dogs.  Check with your insurance company of you have breed-specific questions. 

HOW MANY CLAIMS DID THE PREVIOUS HOMEOWNER FILE?  Why would it make any difference who the previous homeowner was, and if he filed any claims on his insurance?  According to insurance companies, it can send up a red flag that there might be trouble with a home that could cost them plenty in future claims.  Problems such as faulty plumbing, mold, electrical problems, burglaries and more could be ongoing difficulties that your insurance company are not willing to take a chance on.  Just as credit reporting agencies keep track of our repayment histories, insurance companies use agencies such as CLUE (Comprehensive Loss Underwriting Exchange) and A-PLUS (Automated Property Loss Underwriting System).  Insurance companies are able to pull up both the buyer’s and seller’s past seven year records for comparison.  Oddly enough, your clean record could be damaged by the previous homeowner’s habits.  

HOW CLOSE IS THE NEAREST FIRE DEPARTMENT?  If you decided against a home that was too close to a fire department and thought that the sirens might keep you awake at night, you might want to rethink the purchase.  The minor sleep intrusion could save you thousand of dollars over the life of your policy, because in most case, the closer you are to rescue, the lower your policy.

However, another odd coverage factor could result in higher rates, or even being uninsurable, even if you live right next door to a fire department.  An agency called ISO (Insurance Services Office) compiles information about the efficacy of the fire departments closest to your home.  If your local FD is found lacking, you will likely be paying higher premiums.

 DO YOU HAVE AN ALARM SYSTEM?  It only makes sense that the more forewarning your home’s systems can give you in case of fire or break-in, the less your policy will cost.  Depending on the type of burglar alarm system installed, it may be possible to save anywhere from 1 to 20% from the annual insurance tab.  A smoke/fire alarm detector can further add to the savings, and other alarm systems such as carbon monoxide or freezing pipe alarms can also pay for themselves, when the insurance savings is realized.

While there are many factors that can add to the amount of a homeowner’s policy, there are just as many that can help to decrease the payments.  Check with your insurance company to see what types of plans it offers, and how it can provide the best coverage at reasonable prices.