Your Dog May Keep You From Qualifying for Home Insurance

Did you know that most home insurance policies cover you for animal liability? This means that if your dog/animal bites and/or injures someone, your home insurance will fork up the bill for those injuries. Because homeowner’s insurance companies offer this coverage, they will restrict what kind of animals are allowed before they agree to insure your property.

Home Insurance Austin TX

Home Insurance Austin TX

Exotic animals and animals with the reputation of being violent or aggressive can cause you to be turned down by most insurance companies. What animals make it onto the “exotic, violent, or aggressive” list? Well, exotic is a no-brainer – no lions, tigers, bears, or of some of the smaller pets like insect or reptiles.

Because dogs are the most common type of pet, insurance companies have made a list for unacceptable dog breeds based on statistical injury data. Breeds of dog like Doberman, Rottweiler, Pit Bull and Chow Chow usually make it to this list. The list of unacceptable dog breeds will be different with every home insurance company.

Now before you say it, we know not every Pit Bull is mean and not every Rottweiler is an attack dog, but all the jerks that breed dogs to fight and be attack dogs have ruined it for everyone. If you are in a situation like this, our recommendation will be to shop until you find a home insurance company who will accept your pet. As last resort, you may be able to find an insurance company who will insure your house with the dog, but will want to exclude animal liability.

 

Austin Home Insurance Policy Holders Need to Understand Actual Cost Value VS Replacement Cost

Have you compared your home insurance policy (or any property insurance policy) and see some insurance policy state they cover on replacement cost basis and others state they cover actual cash value basis?  What is the difference?

 

The reality is that in some cases it is night and day difference.  In case of a claim, actual cash value bases will take into account depreciation.  The theory is that in case of a claim, the property must be depreciated because it has been used (no longer brand new), so why should new prices be paid to replace this property.  Insurance is in place to indemnify, NOT for insured’s to be better off (or benefit) after a claim, so ACV is a generally accepted insurance principle.

 

ACV Example: you have a 20 year roof on your 2000 year build home.  In 2015 (you still have the same roof from year 2000), a hail storm hits Austin and it tears down all your shingles, you now need a new roof. Actual cash value basis will depreciate your roof by 75% (15 years roof has been in place / 20 years roof expected life), minus the deductible.  If we assume your deductible is $1,000 and the cost to replace your roof is $10,000, the estimate pay out on this claim is $1,500 ($10,000 – $7,500 (75% of$1,00) – $1,000 (deductible))

 

Many insured complained at the ACV arrangement, so insurance companies came up with replacement cost payout basis. There is no depreciation taken into account in replacement cost.  Let’s use the same examples we used above, but apply replacement cost instead.

 

Replacement Cost Example: on the same 20 year roof which cost $10,000 to replace after 15 years, the payout would be $9,000.  The logic used here is that  in case of a claim, the insured would have to buy new wood, paint, shingles, etc.  Therefore, the insured sustained no true gain the insurance company paid for the claim.  So the concept of “indemnity” still stands.

 

 

The reality is that purchasing a replacement cost policy is much more expensive and more difficult to qualify.  Generally, only property in very good condition will qualify.