Is having a pet an insurance concern?

As the spring season approaches the latest addition to many families will be a pet. According to the National Pet Owners Survey conducted by American Pet Products Association, 68 percent of US households owned a pet in 2017; 60.2 million households have dogs and 47.1 million have cats. That same survey identified that the average annual expense for a dog was $1,549 and $888 for a cat. The impact on insurance was not part of that calculation. Your new pet can have a big financial impact on your family.

While those annual expenses include items like food, treats and grooming, the greatest impact is from veterinary expenses. The average annual veterinary expense for a cat is $427 while for a dog it is $731.  Those are average expenses; extraordinary expenses in any one year can run much higher. A method of leveling those expenses is through the purchase of pet insurance. There are 12 major pet insurance companies in the United States. Coverages for those plans vary as do the costs for those coverages. A typical plan for a dog provides for reimbursement of your pet’s veterinary expenses after a $250 annual deductible and costs about $45 a month or $525 a year. The same plan for a cat is $18 a month or $215 annually.

With 90 million dogs owned as pets in the United States, they are the most popular pet in America. Some will seek out a non-traditional dog breed without awareness of the breed’s history of aggressiveness nor the impact it might have on homeowners insurance.

When you take out a homeowner insurance policy all companies require you to sign an application filled with numerous questions that are used by your insurance company to establish your rates. It includes questions relating to your pets. Your homeowners insurance is not affected when you add a traditional pet such as a cat, rabbit, hamster, nor most breeds of dogs. If you have a dog, the application further questions if it is a breed considered an aggressive breed of dog and if there has been any bite history. Your coverage will be affected if you chose to add an “exotic pet” or “aggressive dog” breed. Commonly identified as exotic pets are snakes, ferrets, and other non-domestic animals.  Aggressive dog breeds include Akita, American Bull Dog, Chow, Doberman, German Shepard, Mastiff, Pit Bull, Pit Bull Terrier, Rottweiler, Staffordshire Bull Terrier, Wolf Hybrid, or any mixture of these breeds.

I am often questioned how the insurance companies can make blanket assumptions of a dog breed’s aggressiveness. Nearly every decision an insurance company makes is based on statistics; in this case statistics on the frequency and severity of dog bites associated with a breed. A comprehensive study by the editor of Animals 24-7 reported on “serious dog attacks” in the US and Canada from 1982 through 2014. That report supported the insurance companies’ position. The study showed that Pit Bulls and Pit Bull mixed breed dogs account for 6.7% of the dog population with 3,603 bites. Bull Mastiff and other Mastiff breeds account for 1.17% of the dog population and 137 of the attacks. Conversely it identified 88 attacks by (Yellow, Black and Chocolate) Labrador breeds which account for 12% of dog population and 13 attacks by Golden Retrievers which account for 3% of the dog population. The disproportionate number of aggressive attacks/bites for the dogs described as an “aggressive breed” clearly justifies that labeling.

For those of you reading this and thinking, “not my dog”, it is important to recognize that you may be correct. The training of your dog can have a great impact on the aggressiveness of an individual dog. Some insurance companies recognize that the individual personality of a dog and the training it receives can have a big impact on your pet’s likelihood of aggressive behavior. As an example, American Commerce insurance will insure your “aggressive breed” of dog if it has passed the “AKC Canine Good Citizens Program” and does not have any bite history.  Other companies may charge a special premium for such dogs. If you have an aggressive dog with a bite history, there are limited options available for you.  In most cases, you will be required to sign a waiver of liability excluding coverage for any aggressive action taken by the specific dog. The consequence associated with signing such a waiver is that you may have insurance of all of the normal perils found in a homeowner policy EXCEPT for damage or injury stemming from the aggressive dog. With the 2016 average dog bite settlement at $28,000, you need to understand the financial consequences your dog can have on your family.