Do you have a dog “known to be nervous or temperamental?” If so, Stillwater Property & Casualty can deny you one of its insurance policies.
Does your property fail to “show pride of ownership” and does it have one of those roofs “that exceeds their maximum useful life expectancy?” You and Peoples Trust might differ on what that means, but the company’s guidelines say those are not eligible for coverage.
Each insurer has its own list of what it calls ineligible risks — features of homes, characteristics of homeowners or amenities brought to a home. Companies use those to screen out applicants or to decline to renew policies.
As homeowner insurance claims keep increasing in Florida, so do risks that companies won’t cover or will cite to deny coverage altogether. Peoples Trust, for example, applied to the state April 1 to expand its list to include roofs with attached solar panels and homes with more than two dogs — though the company backed away from the dog proposal this week.
Increased costs to settle water damage and other losses in the tri-county area in particular are prompting companies to expand their ineligible risks with characteristics they believe lead to more claims, says Miami-based insurance agent Dulce Suarez-Resnick.
“It’s going to get more strict,” she says. “A bunch of companies have [stopped writing policies in] lots of ZIP codes. The ones still writing, to get the best risks are looking at all these things: how well houses are maintained, the types of claims customers have had. The age of your roof and the type of roof you have can make you ineligible.”
Excluding high risks helps keep rates affordable for everyone, says Werner Kruck, chief operating officer of Ormond Beach-based Security First, one of the state’s five largest homeowner insurers.
Companies by and large are permitted to set their own rules for what is and isn’t eligible for coverage, but state regulators will “question anything that doesn’t look right,” Kruck says.
Many ineligible risks are common, and Kruck says customers accept them as common sense: No trampolines. No diving boards or pool slides. No pools unless enclosed by a 4-foot fence or screen enclosure. You can buy supplemental coverage for some of those risks, but that can be pricey, Kruck says.
Security First will sell a policy on a home with a trampoline, diving board or slide, but won’t cover any losses stemming from their use. “You’re on your own,” Kruck says.
Dogs are a tough issue, Kruck says. Many companies won’t write policies for homes with breeds recognized as dangerous, such as pit bulls, dobermans, German shepherds, chows, great danes, rottweilers and others. Some insurers extend that to dogs with histories of biting, attacking, snapping or, in Stillwater’s rules, “known to be nervous or temperamental.”
While dog bites are the top cause of liability related loss, responsible dog owners feel left out, Kruck says. “It’s less important what the breed is than how the owner trains and keeps the dog.” Security First offers animal liability coverage as an add-on, he says.
Ideally, insurers should be specific when determining ineligible risks and avoid rules that are open to interpretation, Kruck says, such as barring a property that does not show pride of ownership, or a nervous and temperamental dog.
“I don’t know what the definition of nervous is,” he says. “That’s not an objective standard.”
Sometimes a company changes its mind about what’s covered.
Peoples Trust’s application April 1 to the state Office of Insurance Regulation included “applicants who own or have care, custody and control of more than two dogs” and “applicants who have had a home sustain a water or theft loss in the past three years in the amount of $10,000 or more.”
When asked about the company’s proposed additions, spokeswoman Michelle Ubben said a company actuary plans to file a revision seeking withdrawal of those and other proposals. “It is typical practice to file and then work on modifications before underwriting guidelines are finalized and approved,” Ubben said by email.
Ubben said People’s Trust also plans to remove homes that don’t “show pride of ownership or are in a state of disrepair” from its list of ineligible risks. “We found it to be too vague to be very useful in selecting risks to insure,” she wrote.
Some risks become apparent only after a policy is written. Federated National won’t write policies for homes with single-strand aluminum wiring. Heritage Property & Casualty won’t accept older homes with “knob and tube” electrical wiring, aluminum electrical wiring or fuses.
Many companies doing business in Florida ban properties with polybutylene, cast iron or galvanized plumbing, which have proven susceptible to leaking.
New home purchasers who don’t know about their wiring won’t have their policies canceled if that comes to light in the middle of the policy term, Kruck says.
And if a company finds out that a policyholder bought a forbidden dog, the homeowner will get a letter of non-renewal. The policy won’t be canceled midterm unless the homeowner lied on the application.
“If you signed the application and made sure all the answers are correct to the best of your knowledge, you’re going to be in good shape,” Kruck says. “It’s the insurance company’s responsibility to find out if you are ineligible, through the questions they ask on your application.”
Lying about a known risk can lead to immediate cancellation and worse — a referral to the state Division of Insurance Fraud, Kruck says.
Suarez-Resnick says she encourages her renewing customers to carefully read their policies each year to ensure that their insurer hasn’t added exclusions or ineligible risks that could result in denial of coverage or non-renewal.
“The customer needs to be aware and ask as many questions as possible: Are there any limitations under the new policy that I didn’t have under my old policy? Are there any things they no longer cover?”
Applicants who find themselves ineligible for coverage by private insurers will be able to buy a policy from state-run Citizens Property Insurance Corp. “They have to take you,” Suarez-Resnick says.