10 Facts You Should Know About Homeowners Insurance

Homeowners insurance takes a bite out of your budget when you own a home. Laura covers ten facts you should know about home insurance so you get the most out of it, fully understand the coverage, and pay less. 

Laura Adams, MBA
10-minute read
Episode #473

In every state except California, Maryland, and Massachusetts, keeping your credit in tip-top shape will help you save a substantial amount of money on home insurance.

Fact #6: Insurers may not love your dog as much as you do

If you love your dog as much as I love mine, you may be surprised to know that your furry friend could cause problems with your home insurance.

Since coverage typically includes liability for all members of your household, including your pets, insurers are particular about which dog breeds they’ll insure. The average cost of a dog bite is $30,000, and they make up a third of all liability claims.

Large, powerful breeds may be blacklisted altogether or cause you to pay an inflated home insurance rate. Some breeds most commonly excluded from coverage include:

  • Akita 
  • Alaskan Malamute  
  • Boxer  
  • Cane Corso 
  • Chow chow  
  • Doberman Pinscher  
  • German shepherd  
  • Great Dane  
  • Mastiff 
  • Pit Bull or Staffordshire Terrier  
  • Presa canario  
  • Rottweiler 
  • Siberian husky 
  • Wolf hybrids

If your dog is blacklisted, consider buying a separate, inexpensive umbrella liability policy. You could get a $1 million of coverage for less than about $300 per year.

Fact #7: You shouldn’t always make a claim

Insurance is one of the only products you buy that you hope you’ll never have to use. Not only is repairing damage to your home a real hassle, but you may not realize that simply making an insurance claim can cause your rate to skyrocket for years!

Insurance companies have statistics showing that after making one home insurance claim, you’re more likely to make a second and third one. So the company typically adjusts the cost of your coverage to compensate for that future potential risk.

Depending on where you live and type of claim you make, such as property damage or liability, your annual premium could increase 9% on average nationwide after making just one claim.

Insurers track your claims history using shared databases, such as the Comprehensive Loss Underwriting Exchange (CLUE). It maintains all insurance claims you’ve made for your home and vehicle for up to 7 years.

What’s interesting about claims history on a home is that even the prior owners’ insurance claims made over the previous 7 years, can affect the homeowner insurance rate that you have to pay. While that may seem unfair, an insurer views a property with multiple claims as a higher risk for having more claims in the future and may charge you more.

But what’s even more surprising to many is that simply talking to an insurance company or agent about specific damage to your home can result in higher rates. In most states, insurers can make a notation in your CLUE report if you simply inquire about damage that’s occurred.

You can view your auto and home CLUE reports at LexisNexis for free every 12 months. Just like with your credit report, you should review it carefully and dispute any errors right away.

Never make small, frivolous claims. Only file a home insurance claim when it’s absolutely necessary.

The bottom line is that to save money, carefully weigh whether making a claim is in your best financial interest over the long run. Never make small, frivolous claims. Only file a home insurance claim when it’s absolutely necessary.


About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.