Homeowners Insurance Coverage for Dog Owners

Insurance companies have paid particular interest to dogs in recent years and have worked at field underwriting all Homeowners and Renter’s policies for dog exposures. Their main focus is to eliminate exposure to severe losses. In 2002, dog-bite claims cost insurers almost $350 million, and accounted for a full fourth (1/4) of all liability claims. The potential exposure is significant, so underwriters, looking to earn their keep, have come up with ways to reduce their exposure.

At a typical insurance company, information on all large losses where money has not been subrogated, is gathered and periodically reviewed. Usually a committee of senior underwriters reviews what happened and then try to determine if the event was a truly unforeseen occurrence or was the loss something that they could have avoided by changing or enforcing current underwriting guidelines. From this work they have produced the policies that apply to dogs.
Since a significant percentage of the population owns dogs, insurance companies have choices to make on how to cover dogs. Some of their options:

1. Exclude dogs from coverage. With this option they risk alienating dog owners who don’t have aggressive animals and take their chances that a sharp penciled plaintiff attorney won’t pick the exclusion apart in court.
2. Price policies taking all breeds types into account. Look at all dog bite cases and charge everyone enough to pay for the large losses. The insurance companies that choose this are at a disadvantage for two reasons: (1) they will be priced higher than their competition that restricts dogs and (2) people with dangerous dogs will seek coverage growing their risk exposure, not spreading it out (called adverse selection in insurance terms).
3. Write an endorsement and charge dog owners more money for dog coverage. Again, you’ll get adverse selection with dangerous breeds flocking to you. You’ll also alienate owners of less aggressive dogs who can go elsewhere for less money.
4. Identify which dogs account for the majority of bites. Then expand underwriting rules to eliminate these exposures by making them ineligible for coverage. If a risk does not have a policy, then there’s no exposure. This option means less business and fewer premium dollars, but fewer large losses. It also does not alienate dog owners with less aggressive breeds.

The only company I’ve seen that offers option one (1) is Foremost Insurance , a standard market company out of Michigan that offers policies to higher risk properties. A few companies have not restricted dog breeds; Farmers Insurance only restricted dogs with a bite history. As you can probably guess, most preferred-market companies have opted for option 4, so I’ll touch on their restricted dogs list.

Several states have tried to restrict an insurer’s ability to underwrite dog exposures by trying to outlaw breed discrimination. With opposition from insurance company lobbyists these bills have gone nowhere.
Underwriting Rules do not allow aggressive or potentially dangerous animals. The lists vary by insurance company but most have listed the following breed of dogs as unacceptable:
Pit Bull Terriers, Doberman Pinschers, and Rottweilers, or any mix of these breeds.
These are just a few of the breeds that are more susceptible to aggressive behavior and it does not mean these are the only breeds insurers are concerned with. There are some carriers that have a more extensive list of unacceptable breeds. Breeds that appear on these lists include:
Akita, Alaskan Malamute, Chow, German Shepard, Presa Canario, Husky, Staffordshire Terrier and wolf hybrids to name a few.
Insurers reserve the right to decline coverage based on the overall exposure, or where they have inadequate information.
A challenge in underwriting dog exposures is that ANY dog, regardless of breed, has the capability to cause severe injury to others. Just like people, animal behavior can be a product of their environment. In addition, much depends on the lineage, how the dog was bred and how they have been treated or trained. The presence of other dogs on the premises can also have an impact on their demeanor.
The fact that insurance reports (CLUE) do not reflect a claim or that an applicant has had coverage with another carrier while owning the dog does not mean the exposure is acceptable. Keep in mind that some carriers have addressed the issue by excluding any animal liability.
There is a misconception by some that the first dog bite is “free”, meaning the exposure to loss is less. This is a fallacy. In many jurisdictions, strict liability prevails for a dog bite, particularly in those situations where it can be proven the animal is inherently unstable, the insured has had the dog trained to be aggressive or where the dog has attacked with no provocation. These factors illustrate why insurers underwrite each and every dog a homeowner or renter has. Exceptions and exclusions will not be an option.

To properly determine the acceptability of a dog exposure, your insurer will ask questions to develop specific information through inquiry and inspection of your premises:
1. What breed is the dog? A mutt or mixed breed is not an acceptable answer. They need to know the specific breed to properly assess the exposure. If you can’t determine this, then they would want to review a photo of the dog before coverage is bound or even request a statement from their veterinarian on the mix.
2. How long has the Insured owned the dog? It would be appropriate to find out if you’ve owned the dog since it was a pup. If you got it as an adult, where did you obtain it? What was the reason the prior owners gave it up? Was it because of aggression?
3. What is the dog’s demeanor? Is it good with children? Has it shown aggressive tendencies? If there is any indication of inherent aggressiveness, or does not tolerate children well, insurers are not interested in taking a chance.
4. What is the dog’s history (has it attacked before)? If so, insurers will not write the exposure period.
5. Has the dog been to obedience school? You need to differentiate obedience vs. training for other purposes, i.e. being a guard dog.
6. Where is the dog kept? Is it fenced, chained, or in the home? Is the dog left unattended for long periods, i.e. when the owners are working?
7. What type of fence or enclosure is used, if applicable? Is it in good shape? How tall is the fence? Is there a pen? For any of these, what’s the likelihood of escape?
8. What are the local ordinances involving keeping the dog? This is especially important if kept outdoors.
9. Does the insured live in a metropolitan or rural area? What is the proximity to small children?
If you are unsure on whether or not a dog exposure is acceptable once you’ve asked pertinent questions, I’d encourage you to call your agent to discuss.

If a sign is posted on the property this should send up red flags for a potential liability hazard, even if the insured does not currently own a dog. Perhaps you “dog sit” for a friend or a relative which is still a liability exposure for the insured.
If you do not own a dog but are using it as a theft deterrent you should remove the sign. You would be advertising for a potential loss if you have someone visiting with a dog since both parties can be held liable.

Landlords and Dogs
A landlord who allows a tenant to have a dog on the premises can and has been held liable. There, it’s been said, you’ve been warned. When interviewing tenants you need to ask what breed of dog they have. If their eyes roll up and to the right, they’re looking for a creative answer because they don’t want to tell you pit-bull. Sometimes they’ll tell you a boxer mix yeah mixed with pit-bull (been there – done that). Insist on seeing the dog. Approach the dog, is he hostile or aggressive? If yes, find different tenants. On my leases, I write an addendum for animals, that way I can revoke the animal privilege without rewriting the lease.
Insurers will never stop underwriting dogs when writing homeowner policies. Dogs are a liability hazard for insurance companies, and the risk associated with insuring their owners is too great to overlook. Addressing an unacceptable exposure after a loss occurs is too late. Take the time to identify your own exposure. By doing so, you help protect yourself and lessen the risk of lawsuits and insurance issues.