Because
of both the high rate of drowning and the severity of water-related
injuries, insurance companies consider swimming pools one of their
biggest liabilities. Consider the possibility of a neighborhood kid
accidentally falling into your pool and sustaining an injury. You could
be held liable for the high cost of their hospital bills, and if they
choose to sue, you could also rack up considerable lawyer fees and other
court expenses.
When shopping for a new home, some of the same features that lure you in could end up costing you extra in
insurance premiums. If you’re like the many buyers who wait until after going into
contract to get insurance quotes on a property, you could be faced with
some serious sticker shock. Check out these five seemingly desirable
home features that might end up costing you more than you realize in the
long run:
1. Swimming pools
Most standard homeowners insurance policies include a minimum
liability coverage limit of $100,000 in order to help protect you
financially in the event of such a lawsuit. However, if your home
includes a swimming pool, the Insurance Information Institute recommends
increasing your limit to at least $300,000 or even investing in an
umbrella policy to increase your liability coverage.
Your insurer will also likely require you to build and maintain a
self-locking fence around the pool to keep others – especially children –
out. Additionally, if the pool itself is expensive, you may need to
increase coverage limits on your policy in the event it’s damaged by a
storm or other covered peril.
2. Trampolines
Nearly
100,000 trampoline-related incidents are reported every year, according
to a survey by the US Consumer Product Safety Commission’s National
Electronic Injury Surveillance System. While the kids may love it, a new
trampoline almost certainly won’t play well with your insurance
company. Depending on your state and your specific carrier,
trampoline-related claims may be excluded from your policy. That means
if someone is injured on a trampoline on your property and decides to
sue, you might be paying the legal costs out of your own pocket.
Even if there are no specific exclusions from your carrier or in your
state, it’s still important to notify your agent any time you introduce
a “high-risk” item – such as a trampoline, tree house or a swimming
pool – to your property to make sure you’ll be properly covered in the
event of an accident.
3. Water view
The value of a waterfront property can be substantially higher than
comparable inland properties, whether you live by an ocean, lake, river
or some other body of water. However, a beautiful water view often comes
with a higher risk for flooding and therefore more extensive insurance
coverage.
Although most standard homeowners and renters insurance policies
include coverage against water damage, they exclude any damage resulting
from flood/rising water. For that reason, most residents who live in
high-risk flood zones with a water view typically need to invest in
separate flood policies in order to protect their properties from the
elements. If you have a mortgage on your home, a flood insurance policy
will likely be required by your lender. You can check the flood risk of
any property by visiting the official site of the
National Flood Insurance Program.
4. Vintage charm
Some older homes have maintained original features for decades or
even longer, and discovering a well-preserved historical property can be
a real estate dream come true. Unfortunately, if key features such as
the home’s plumbing system, electrical system or the roof haven’t been
updated since poodle skirts were in style, it’s likely an insurance
nightmare.
If your electrical system hasn’t been updated in more than 10 years,
it’s more likely to malfunction and contribute to a damaging fire than
one that’s brand new. Similarly, out-of-date plumbing systems could lead
to devastating water damage and an older roof is more susceptible to
storm damage and other costly damages. With the combined average cost of
claims topping $40,000 for these perils, according to the Insurance
Information Institute, it’s not surprising insurance carriers charge
more to insure these properties.
5. Square footage
Bigger is not always better. The larger your home, the more it will
likely cost to replace if it’s ever damaged or destroyed in a covered
peril. That means you’ll require a higher amount of dwelling coverage,
which is the coverage provided under your homeowners policy to rebuild
the structural elements of your home in the event of a claim.
To get a rough idea of how much dwelling coverage you’d need to
completely rebuild your home from the ground up after a total loss,
insurance companies multiply the
total square footage of the property
by local construction costs. Keep in mind, building with more expensive
construction materials will impact your coverage needs, so upgrades
such as granite countertops also should be reported to your insurance
company.
Of course, none of this should dissuade you from buying a waterfront
home or installing a swimming pool. Just be sure you enter into the home
buying experience with some knowledge about which types of homes carry
higher risk — and therefore larger insurance price tags — than others.