Mistakes to Avoid! This Webpage Is New And Will Be Updated Regularly.
Mistake #1 :: Calling Your Homeowner Insurance Company
Oftentimes, people want to know what their homeowner insurance policy covers. But reading the policy is too much of a hassle. So, they call their insurance agent. Big Mistake #1.
If a homeowner calls his insurance agent and asks, "Does my policy cover my dog? I am really concerned that my policy does not include dog bite coverage," the insurance agent hears this:
"I think I might have a dog bite claim soon," or
"I don't believe in preventing claims. I just want to know my insurance policy will handle it if I have a claim," or
"I don't believe that I should muzzle my dog. I don't believe that I should have to use a leash. I don't believe that I should have to confine my dog in a kennel to protect visitors. I don't believe that I should have to stay in the yard with my dog when I let him outside the house. I don't believe that I should have to take steps to prevent my dog from being taunted by the neighbor's kids. The kids' parents should control their children. I think I should have a right to take my dog to the dog park even though he has gotten in a few fights from time to time. But it was the other dogs that started the fights. The other dog owners should control their dogs."
The typical insurance agent will use your inquiry to suggest that your insurance policy be non-renewed or that you sign an exclusion for liability claims arising from your dog.
But the truth is that you have no reason to believe your dog will bite someone. You only contacted the insurance company because your accountant or your lawyer advised you to increase your liability coverage. Or maybe you contacted your insurance company only because a neighbor told you that your breed of dog is "blacklisted" and that you have no insurance coverage for your dog. But the way you asked the question of your insurance agent caused the insurance agent to become unduly alarmed.
And maybe you did read your homeowner insurance policy and found nothing relating to dogs and you assume that this means that your homeowner insurance policy has no liability coverage for your dog. But that is not true. Homeowner policies that are silent regarding liability coverage for your dog typically include liability coverage for your dog.
So, the fact is that your homeowner policy covered your dog and only because you called your homeowner insurance company and asked the question above, your homeowner policy is in jeopardy of non-renewal and/or is subject to a dog exclusion that you never would have had if you never called your insurance company in the first place.
Mistake #2 :: Buying An "Insurance Policy" That Includes A Charge For "Surplus Lines" or "Excess Lines" Tax And Believing That You Have The Best Available Liability Insurance Coverage
An "insurance policy" that charges a "surplus lines" or "excess lines" tax is not an insurance policy. It is a "manuscript contract". It is not regulated by your state insurance regulator and is typically characterized by being very expensive, having a high deductible, and having language that makes if very unlikely that a claim would ever be covered.
Also, these types of "insurance policies" are almost always "claims made" contracts. This means that if your contract is effective from January 1, 2013, to January 1, 2014, the contract will not respond to a claim that occurred prior to January 1, 2014, if the claim is reported on January 2, 2014. Most claims are not reported until the day before the statute of limitations expires for filing a lawsuit. The statute of limitations varies by state but is typically one year or two years. Insurance policies that are not "claims made" are "occurrence" policies and a claim is subject to being covered if the claim occurred while the policy was in effect. So, if you have State Farm homeowner insurance until January 1, 2014, and you switch to Nationwide homeowner insurance on January 2, 2014, and the claim occurred prior to January 1, 2014, but was reported after January 1, 2014, State Farm would respond to the claim, not Nationwide. But if State Farm was a "claims made" contract (and I have never seen a "claims made" State Farm contract, I am just trying to illustrate a point), then neither State Farm nor Nationwide would respond to the claim and you would have no contract to rely upon to help defend you.
These type of contracts that charge a "surplus lines" or "excess lines" tax almost always have the feature by which the "limit of coverage is reduced by the cost of investigation and defense." This means that if you have a $100,000 contract limit, you have a claim, you are sued, the jury awards $100,000; you do not have $100,000 available to pay the jury award. You only have what is left over after the contract pays the investigators, the adjusters, and the lawyers. And frankly, that means that you could have only $20,000 left. So, the $80,000 of the jury award will have to be paid from your assets. Most insurance policies that do not charge a "surplus lines" or "excess lines" tax have limits of coverage that are not reduced by the cost of defense. I have never seen a "standard policy" (which is a policy that does not charge this tax) that has limits of coverage that are reduced by the cost of defense.
These type of contracts nearly never cover punitive damages. So, if a jury awards $6,000 in medical costs and $1,000,000 in punitive damages to punish you for being negligent; you will have to pay the $1,000,000 out of your assets. I have never seen a "surplus lines" contract that included coverage for punitive damages.
There are many other significant limitations to these "surplus lines" contracts. In fact, most state insurance regulators prohibit an insurance agent from selling a consumer a "surplus lines" contract unless that agent has attempted to find you a "standard" contract but was declined by three or more "standard" insurance companies.
Mistake #3 :: Thinking That Insurance Is A Solution To Your Concerns About Your Dog Liability Exposure
If you buy an insurance policy with a limit of $100,000 but you are sued for $2,000,000; your insurance policy will fall short of your needs. Most insurance policies do not cover punitive damages. And many jury awards include punitive damages. You will be required to pay the amount of the jury award that is not covered by insurance with your assets. Some states, counties, cities, and towns are criminally charging dog owners if their dog bites an animal or a person. So, a simple accident could render you a criminal, or worse, a felon. Pennsylvania once made violations of its dog control laws felonies. But I believe they changed their laws recently and violations are no longer felonies. Washington state once had a mandatory one year jail term if a dog owner violated the dog control laws. Those laws may still be in effect in Washington state. But no insurance policy can change your criminal record.
If your dog injuries a child, can you live with the guilt you might feel? No insurance policy will change the guilt you may have to live with for the rest of your life.
At all times, you must have the attitude that prevention of a dog-related injury is your first and last priority. Some people love their dog as if the dog is a child. And that's fine. But if you really love your dog, you will make sure that you prevent him from injuring others because some county, city, and town ordinances will require your dog to be euthanized as a consequence; and some will charge you with a felony.
Some insurance claims are fought in the courts for years. It is not uncommon that a lawsuit could easily continue for as long as ten years or more. And you will not be able to escape the constant need to appear for depostitions, court hearings, and more.
Mistake #4 :: Posting "Beware of Dog" Signs
A homeowner in Chaffee, Missouri, reported that her homeowner insurance company, Merrimack Mutual Insurance Company, cancelled her only because she posted "Beware of Dog" signs. The yard is fully fenced with a six-foot privacy fence; the dog is a bird dog, not classified as a "dangerous dog", and he has no history of aggression. She contacted American Family Insurance Company and was told that American Family Insurance Company also opposes the use of "Beware of Dog" signs. This issue arose because Merrimack Mutual Insurance Company sent an inspector to take photos of the property.
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