Five Home Insurance Red Flags and How to Avoid Them

Five Home Insurance Red FlagsDuring a recent wind storm, a friend was awakened during the night by a loud banging sound. Moments later, her neighbor called, saying that he had big pieces of her home’s siding on his front lawn. My friend’s first thought was, “How will this claim affect my home insurance rate?”

After hearing all the horror stories about skyrocketing rates or, even worse, being dropped from insurance altogether, this is a concern that just about every homeowner is bound to have at one time or another.

Do you know what’s in your homeowners policy? If you ever need to file a claim, do you know what is covered and who to call? Once your siding has been blown onto your neighbor’s lawn, it’s too late to do anything about your policy. At that point, you’re stuck with whatever you’ve got. Knowing the coverages and limitations of your policy can prevent costly, or even catastrophic, financial troubles.

Although weather-related incidents are out of our control, there are other factors, or potential red flags, that it pays to become familiar with when selecting or renewing your homeowners insurance policy.

Credit score

Just as your credit score can affect the interest rate you’ll be offered on a credit card or a mortgage, it also can affect the cost of your homeowners insurance.

Since research has shown that those with properly-managed finances are less likely to make insurance claims, credit scores are used by many insurers to set home insurance rates.

Those with a history of high debt and late or missed payments may find themselves with pricier home insurance policies compared with more responsible homeowners with higher credit ratings and less debt.

By maintaining a stellar credit rating, you are a better risk for home insurers, and are more likely to save money by securing a lower rate.


Some insurance companies consider homeowners with risky occupations or low-paying jobs to be more likely to neglect their property or ignore necessary home maintenance.

As discriminatory as it sounds, research has found that those with higher paying jobs are less likely to file insurance claims because they are more apt to take the proper steps to avoid or minimize loss.

No matter what your job entails, it’s important to stay on top of home maintenance problems before they get out of hand. Keep in mind that home insurance is for sudden and unexpected damage, not damage that can be easily prevented.

By giving your home a regular checkup, from the roof to the foundation, from the furnace to the outdoor wiring, at least a couple of times a year, you can help prevent unnecessary losses and jacked-up home insurance rates.

Claims history

As you already may be well aware, your past claims history can have a direct impact on your home insurance rate.

In some situations, such as my friend’s with the blown-off siding, filing a claim is inevitable.

However, for smaller claims, it’s best to weigh the cost of repairs versus potential home insurance premium increases. Speak with your agent or insurance company representative for more insight in these cases.

Dangerous dogs

Contemplating a trip to the pound or pet store? You may want to think twice, as your choice of dog can negatively affect your home insurance premium.

As unfair as it may seem, there are breeds that have been blacklisted by insurance companies. Considering that price tag, it should be no surprise. According to MSN Money, dog bites cost insurers about $310 million a year.

If you already own a more dangerous or troublesome breed, or if your dog has bitten someone, you may find it more difficult or even impossible to obtain home insurance.

Because policies and insurers differ, it’s best to shop around for the best dog owner policy before taking a potentially blacklisted breed into your home.


Pools, spas, and trampolines can be great additions to a home, but also can be pricey for home insurance policies.

In fact, when I notified my insurance agent about our new trampoline, he said, “I’ll pretend I didn’t hear that.” This is because, while pools and spas are considered hazards that can raise premiums, trampolines are more likely to be excluded from policy coverage, or even to cause insurers to drop you cold. The cost of a neighbor child getting seriously hurt is just not worth the risk.

This may be a case where umbrella insurance is needed. Check with your agent or insurance company representative.

Keep your coverage and affordable rates by avoiding these home insurance red flags. The money saved will make it worth your while.

2 Responses to “Five Home Insurance Red Flags and How to Avoid Them”

  1. Anonymous

    Actually acts of nature tend not to raise individual premiums, however, the company may impose an across the board rate hike if there are many claims in one year.

    Small claims are rarely worth reporting.

  2. Anonymous

    Practical advice. I agree that small claims are rarely worth the inconvenience of filing a return, especally on homeowners insurance. Funny, my neighbors are all waiting for hurricane season to blow some shingles off their roof, so they can claim a new one on insurance. Cheap!

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