Do your hands tremble every month when you pay your home insurance premium? Do you spend the next 20 minutes complaining to your significant other about the cost? Or, worse, have you ever been denied homeowners coverage all together? If so, you might be a risky insurance customer and not even know it.
Insuring a house has as much to do with you as it does the actual building. Home insurance providers set your premium by evaluating the risks posed by you and your house. Homes in Tornado Alley, for example, cost more to insure because of the risk of wind damage. As for you, if you pose certain risks as a policyholder, your premium could shoot through the roof.
Here are a few types of customers who may raise red flags for home insurance providers. If you are one of them, your provider might be saying, “It’s not your house — it’s you.”
The low credit scorer
If you’ve got a low credit score, your home insurance provider could consider you a risky insurance customer. Insurance providers often factor in a homeowner’s credit score when determining premiums, and usually a lower score means a higher premium.
Why? Because carriers believe a poor credit score signifies high risk. The good news is that if you’ve got a low credit score now, you can work to improve it over time. How? Pay your bills promptly, actively monitor your credit score and don’t take out too many types of credit.
The dog lover
When it comes to risk, you may not think your cuddly pooch poses a threat, but some insurance providers believe differently. Carriers often won’t provide coverage for certain breeds because, statistically, they pose more of a liability risk. Pit bulls, Dobermans, Rottweilers and Akitas are just a few breeds that could cause your insurer to elevate your risk as a policyholder.
As for dogs outside those breeds? It depends. If your canine has a history of biting, you could face higher premiums or be denied liability coverage for the animal. Sure, every dog is different, but insurers don’t mess around when it comes to dog bites. The average payout for a dog bite claim in 2013 was nearly $28,000, according to the Insurance Information Institute (III).
The pool owner
Your pool may have seemed like a big plus when you purchased your home, but chances are your insurer isn’t as enthralled with it. Swimming pools pose a big liability risk to insurers. According to the Consumer Product Safety Commission, an average of 5,100 pool- or spa-related injuries in children younger than 15 were treated in hospital emergency departments for 2010 through 2012. During the same time period, 390 pool- or spa-related deaths were reported.
The bottom line: Pools are dangerous, and insurance providers know they increase the odds of a lawsuit.
Are you bad about getting around to repairs in your home? The longer you put off getting that new roof or fixing that leaky pipe, you could be costing yourself some serious dough. Procrastinating on home repairs not only makes you vulnerable to claims, but the more you wait, the longer you could be stuck paying a high premium.
For example, change out the supply hoses on your water heater and washing machine; you can upgrade to braided steel hoses for about $100. An appliance failure could cost you (and your insurance provider) thousands of dollars.
The unlucky homeowner
You may be the most responsible homeowner who ever lived and simply be unlucky when it comes to claims. You can’t help it if a storm caused a tree to crash through your window or if hail pummeled your roof. However, having claims on your history may cause you to look riskier to an insurance provider.
To avoid more claims, do some things to boost safety on your property such as cutting dead branches off trees or checking your roof for loose/missing shingles. Prevention can go a long way in avoiding future claims.
Paying high home insurance premiums or getting denied coverage can be a frustrating experience. However, there are other ways to reduce your premium or find coverage. Comparison shopping is a surefire way to either find the lowest premium or find a provider who will offer you coverage. Each carrier has a different algorithm for determining risk — just because it doesn’t work out with one doesn’t mean you can’t find coverage elsewhere.