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Stay in the know: These three things can cancel your homeowners insurance

Lee Rock • Apr 12th, 2018

Don’t get blindsided by cancelled homeowners insurance. Three common things that most people don’t think or know about account for the majority of cancelled policies: dogs, trampolines, and filing two claims in three years. Knowing about these exposures ahead of time and discussing them with your insurance agent can help you to avoid potential claims issues and cancellations.

Dogs

Did you know that the most common homeowners claim is a dog bite, with average estimated reparation costs of $33,000? In the homeowners insurance world, they say “the first bite is free,” meaning that they will cover the first bite claim, but then they will either exclude that dog from any further coverage, or may even cancel your policy altogether.

When it comes to certain high-risk breeds (Pit Bull Terriers, Rottweilers, etc.) some insurance companies may refuse to write your policy in the first place. If you choose to bring home a dog that is considered to be a high-risk breed after your policy is already written, the insurance company is covering your dog whether they know it or not. But at renewal time, or when the insurance company finds out, they may cancel your policy or refuse to renew. While some homeowners are willing to take the risk for their furry friends in high-risk breeds, many insurance companies are not. When considering adding a new dog to your family, it’s wise to give your agent a call first to ensure that your homeowners insurance company will cover the breed.

Trampolines

Despite their popularity among the general population, household trampolines are discouraged by medical professionals and insurance carriers alike. Trampolines are responsible for thousands of injuries each year—nearly 295,000 injuries in 2015 according to the U.S. Consumer Product Safety Commission. Many parents think that added safety features such as netting surrounding the trampoline, padding on the ground, or fencing encompassing the yard with a trampoline, make injuries a non-issue. However, medical and insurance professionals disagree, stating that many injuries are caused from incorrect landings and collisions with others in the air.

Most homeowners insurance policies have restrictions on trampoline ownership. If trampolines are excluded, your policy will not provide protection for trampoline-related claims. In some cases, it may also mean that adding a trampoline to your property may not allow you to renew your policy. Think twice before purchasing this controversial piece of equipment.

Two claims in three years

You pay for homeowners insurance, so you should use it for any covered loss, right?

Think again…

This common misconception leads to increased premiums, and in some cases, policy cancellations. If you file two claims within three years, it’s possible that your homeowners coverage will be terminated by the carrier.

In the insurance world, frequency equals severity. Experience shows over and over again that someone with several small claims will inevitably have a big claim, and this is a risk that insurance companies aren’t willing to take.

Insurance is designed to cover sudden, accidental events—it should be reserved and used for large losses. When possible, it’s smart to refrain from submitting smaller claims that can be saved for and paid off as a part of your regular budget. Many of the large, direct writer insurance firms you see advertised on TV won’t tell you this when you call to file a claim for your bicycle being stolen and then for small amounts of water damage due to a sink overflowing three months later. They’ll simply cut you a check to cover two small events without asking any questions, and then they’ll deny you or cancel your insurance at the third claim—this isn’t necessarily what’s best for you and your policy in the long run, but they’ve done their job. It’s always a good idea to discuss any potential claims with a trusted advisor prior to filing them.

What else don’t I know?

When it comes down to it, insurance policies are complex and highly-detailed contracts. Most people don’t dive deep into the details, and sometimes don’t know the right questions to ask. PSA’s professionals are trusted partners and advisors who can help you understand your policy and keep you abreast of common hazards and pitfalls to guide you towards informed decisions.

If you need assistance identifying homeowners coverage issues or determining the right policy for you, contact me at lee@psafinancial.com

About the Author: Lee Rock, CPCU, CIC, vice president, PSA Financial, Inc. & president, Glen Rock Insurance, Inc. an affiliate of PSA Financial, Inc., specializes in commercial property and casualty exposures on larger complex risks requiring general liability, property, large deductible worker’s compensation and commercial auto. His expertise also extends to professional liability coverages including directors and officers and errors and omissions programs. He facilitates employee benefits and all areas of personal lines. Lee has been active in the insurance industry for over 34 years and has earned the Chartered Property Casualty Underwriter (CPCU) and Certified Insurance Counselor (CIC) designations. He has a Resident Insurance Advisor designation for the State of Maryland, does consulting, expert testimony, and is a licensed investment advisor. He holds Series 6, 63 and 65 licenses for mutual funds and annuities.