Avoiding a Big Insurance Bite to Your Wallet

Having a dog is something that countless Americans take great pride and enjoyment in. It is, however, a responsibility that sometimes can cost the owner quite a lot of money.

According to information from the Insurance Information Institute (I.I.I.), dog bites accounted for more than one-third of all homeowners’ insurance liability claims paid out in 2009, costing $412 million and an increase of 6.4 percent from the previous year.

Looking at analysis of homeowners’ insurance data from I.I.I., the average cost of dog bite claims was $24,840 in 2009, up a tad from $24,461 the prior year. Over a six-year period dating back to 2003, the cost of these claims has increased close to 30 percent. Additionally, the number of claims grew by 4.8 percent to 16,586 in 2009 from 15,823 in 2008.

According to a spokesperson for I.I.I., the increase in dog bite claims over the last seven years (2003-2009) can be linked to growing medical expenses as well as the size of settlements, judgments and jury awards given to plaintiffs that have risen far above the rate of inflation in recent times.

Numbers from the Centers for Disease Control and Prevention (CDC) show that more 4.7 million individuals in the U.S. are bitten by dogs annually and close to 900,000 of those, half of them children require medical care. Of those injured, 386,000 have to undergo treatment in an emergency room and some 16 die yearly. Given that more than half of all bites occur on the dog owner’s property, the issue is a high source of concern for insurance companies.

For those who own dogs, there are three kinds of law that impose liability on owners.

First, there is the dog-bite statute, whereby the dog owner is automatically liable for any injury or property damage caused by the dog, even without provocation.

There is also the one-bite rule, whereby in some states, the owner is not held liable for the initial bite the dog inflicts. Once an animal has shown vicious behavior, such as biting or otherwise displaying a “vicious propensity”, the owner can be held liable. Some states have gotten away from the one-bite rule and hold owners responsible for any injury, regardless of whether the animal has previously bitten someone.

Finally, there are negligence laws, whereby the dog owner is liable in the event the injury took place because he or she was unreasonably careless (negligent) in controlling the animal.

In the majority of states, dog owners are not held liable for losses incurred by trespassers who suffer injuries from a dog. A dog owner who is legally responsible for an injury to an individual or property may be responsible for reimbursing the injured person for medical bills, lost wages, pain and suffering and property damage.

According to the I.I.I., some individuals acquire dogs for the purpose of guarding their homes, however, deadbolt locks and home security systems are safe burglary deterrents, which will often earn individuals a discount on their insurance premium.

Homeowners’ and renters insurance policies normally cover dog bite liability, with many standard homeowners’ policies providing policyholders with anywhere from $100,000 to $300,000 in liability coverage. Should the claim exceed those limits, the dog owner is personally responsible for all damages above that amount, including legal costs.

A liability policy will also provide no-fault medical coverage in case a dog bites a friend or neighbor. This enables the individual to turn in their medical bills directly to the homeowner’s insurer. Homeowners can typically receive $1,000 to $5,000 worth of this coverage.

For consumers unaware, many insurance companies will insure homeowners with dogs. However, once a dog has inflicted a bite on an individual, your insurer may charge a larger premium or exclude the dog from coverage. Some insurance mandate that dog owners sign liability waivers for dog bites, will some will cover a pet only if the owner takes the dog to classes targeted to modifying its behavior.

The bottom line is to remember that a single lawsuit, even if won by the dog owner who has been sued, could end up costing hundreds of thousands of dollars in legal fees and lost wages.

According to Insurance Information Institute, homeowners should consider acquiring a personal excess liability policy. Also known as an umbrella liability policy, this protects individuals against personal liabilities, such as dog bites, that could impact a major portion of one’s assets.

Umbrella liability coverage typically runs from $1 million to $10 million, and covers broad forms of liability. Many insurance companies have required minimum amounts of underlying coverage – typically at minimum $250,000 of protection from one’s auto policy and $300,000 of protection from one’s homeowner policy.

For dog owners, taking the bite out of a potential lawsuit will be music to one’s ears.