Insurance companies are mysterious entities, and divining how they determine your home insurance rates, minimum liability, and every other confusing aspect of your policy is hardly a sport for the faint-hearted.
Even worse than the gobbledygook is when they surprise you -- a new trampoline suddenly jacks up your premium, or that sweet new puppy means immediate cancellation.
Don't get caught off guard -- make sure you know what raises red flags over at your insurer's HQ.
1. Swimming pool
There's nothing better than splashing in a pool on a hot summer's day, especially if it's right outside your door. But insurance companies don't care if you need to beat the heat. They see your new pool as an "attractive nuisance" -- and nothing more.
"People play in and want to use these things, and they are inherently dangerous," says Michael Thrasher, a research analyst who specializes in the insurance industry at ValuePenguin, a personal finance research and analysis company. "If they happen to fall in, you as a homeowner are responsible."
And nothing concerns insurance brokers more than potential lawsuits. Standard policies come with $100,000 of liability coverage -- which barely covers the attorney fees in a wrongful death, much less potential payouts.
"Every attorney I talk to recommends you purchase additional liability coverage if you have a pool," Thrasher says.
These babies are also considered "attractive nuisances," and most insurance brokers strongly recommend avoiding them completely because of the high risk of injuries or death.
While he admits it's unusual, Thrasher says he's heard of situations where a homeowner either can't get coverage or is completely dropped by an insurance company because of a trampoline.
And as tempting as it might be, don't hide the fact you have one from your insurance company. Some folks might assume there won't be incidents because their kids are responsible, or because the trampoline is covered with a net or buried in the ground. But accidents happen -- including neighbors' children sneaking onto your property.
"If you don't report a trampoline to your insurer, you're opening up a door to have a claim denied," Thrasher says.
3. 'Dangerous' dog breeds
Few insurance companies will outright tell you to ditch your beloved pup, but they might beg you to reconsider before adoption … and drop you if you pick the wrong breed.
Common no-no pets are Akitas, pit bulls, Rottweilers, and German shepherds, although you should check with your insurance company before heading to the breeder or shelter.
While this restriction might seem silly to a dog lover -- some pit bulls are as sweet as pie -- Thrasher says there's a reason for it. The number of dog liability claims has decreased, but the cost of each has increased 16% year over year, thanks to increased medical costs and larger settlements and judgments.
Costwise, "these incidents are up there with a fire," Thrasher says.
4. Upgrading your home's exterior
Brick might look better, but don't upgrade your exterior without letting your homeowners insurance agent know first. If a fire or natural disaster occurs and you're forced to replace your home, you should remember that nicer materials like brick and stone are much more expensive than vinyl or aluminum siding. That can affect the amount of liability you need.
It's rare to downgrade your exterior, but if you're eager to replace that attractive stucco with something a little cheaper (OK, and admittedly easier to clean), check in with your agent. If your new selection isn't fire-resistant or can't handle weather damage, the insurer may cancel your policy.
Here's another attractive nuisance your kids might be begging for: treehouses. (No, we're not talking about freestanding jungle gyms or slides. We mean the ones literally built around a tree.)
Kids see an oasis of fun and happiness and come running, not caring the slightest that they might fall from 10 feet and break an arm, Thrasher says. Before building, discuss your plans with your agent, and expect it to affect how much liability you need to purchase -- and by extension, your monthly premium.
6. Vacation homes
No, it doesn't seem fair that your insurance company can ding you for a home you're not even living in most of the time, but you should prepare for it to happen.
"People roll their eyes and say, 'Well, there's nothing different about this home -- why do I pay more?'" Thrasher says. "But when you think about it, it makes sense."
After all, your primary home is where you live most of the time -- making burglaries less likely and meaning you can quickly fix any major problems that arise. If water starts leaking in the basement of your primary residence, you'll know. If a damaging drip forms in your upstate cabin, it might be a few weeks (or even months) before you notice. That means higher risk, and thus, a higher premium.
7. Frequent Airbnb-ing
Don't jump onto the home-sharing trend without remembering the golden home rental rule: fewer than 90 days.
"If you rent out your home a few times a year via Airbnb and something were to happen, your insurance will probably cover them," Thrasher says. That all changes when you reach the 90-day threshold. Because they're covering you as an individual, not a business, it's likely they won't cover any claims on a property used for frequent home-sharing.
If you insist on going that route, work with your agent to figure out exactly what coverage you need. Or be prepared to shoulder the enormous burden of paying to repair damage from a fire or flooded basement all by yourself.
8. Lots of claims
Some people are naturally butterfingered. And while none of us blames you, your insurance company might. Consider the severity of each incident before filing a claim, otherwise you run the risk that your policy might be terminated.
"If you file four claims in a year for small things, all of a sudden you are starting to appear like someone who is very accident-prone," Thrasher says.
At the very least, expect a premium increase after a couple of claims. And while it's rare to be completely dropped, it might happen if your insurer determines you were at fault for most of the accidents.
Feeling hemmed in by all the rules? It's a tricky process to navigate, but do one simple thing and you can avoid the chaos: Talk to your broker before making any major change. You'll save yourself headaches -- and potentially huge costs -- down the line.