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Risk factors for homeowners insurance policies

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When was the last time you reviewed your homeowners policy?

When was the last time you reviewed your homeowners policy?

Customers buy insurance to minimize their risk and make them whole should a covered loss occur.  What many may not understand is that a number of factors can cause their premiums to skyrocket before a covered peril even occurs.  Adjusters and claims managers handling the ensuing claims also need to be aware of these possible red flags and their impact on any settlements.

An up-to-date home inventory complete with photos can be a major asset to any claim.  We encourage our clients to take a digital tour of every room to record furniture, electronics, antiques, works of art, family heirlooms and other irreplaceable items in the home.  After a fire or major flood, it can be difficult to identify valuable items or their pre-loss condition.

The photos and a detailed inventory should be stored off-site in a safe deposit box or our secure web portal to ensure they are added to the appropriate policy.  Keeping them on the computer at home won’t help if the computer is destroyed in a fire or stolen in a robbery.

Here are a few factors (not in any particular order) that can make a homeowner’s property a greater risk to insure.

Pets

Not every dog is man’s best friend and some insurers don’t take kindly to all breeds. Owning a German shepherd, Great Dane, Siberian husky, Doberman, rottweiler, pit bull, Akita or any other dog that could be considered aggressive could raise insurance rates. “This isn’t only limited to dogs, as exotic animals such as tigers, monkeys and others may cause rates to be high, if you can even get insurance,” says insurance expert Chris Tidball.

Bad credit score

Insurers will look to see if a homeowner has paid his or her bills on time and check credit scores. A lower number could result in higher premiums.

Location, location, location

Just like in real estate, the location of the home really does matter.  Owners of homes located in Florida or along the beaches of Maryland and Delaware can expect to pay more for homeowners’ coverage.

Trampolines

Although exercise is important, some exercise equipment can impact insurance rates.  Trampolines result in approximately 92,000 hospital visits each year.  Parents frequently are unaware that they cause spinal injuries, fractures, and head injuries. Most injuries are not caused by children flying off the trampoline, but because one child lands on another when they are jumping or they try something silly like riding a bike and jumping.  Doctors recommend that only one child at a time be on a trampoline with adequate supervision.

Swimming pools

Another source of higher homeowner insurance rates involves swimming pools.  According to Parents magazine, drowning takes more than 1,000 lives a year and more than half of these events take place in the children’s own home and one-third take place in the homes of friends and relatives.

Fire concerns

Location also matters when it comes to fire stations.  Living too far away from the local fire hall or a fire hydrant  could raise insurance rates.  Of course, a neighbor’s pool could be a source of water in an emergency, as well as a nearby pond.

Poor maintenance

Owners who don’t keep up with their home maintenance may see their rates raised or their homeowners insurance cancelled altogether.  Leaky roofs, old hot water heaters, dripping pipes, and poor water seals are just some of the items to watch out for. In 2012, 17.5% of the losses claimed were related to water damage and freezing pipes.

Claim frequency

Insureds who make multiple claims may be viewed as a higher risk and charged accordingly.  Damage from a burst pipe, a tree that lands on the roof, or a kitchen fire on the same property will raise a red flag and cause insurers to take a closer look.

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