More on Home Insurance
More on Home Insurance
Published April 5, 2019
TABLE OF CONTENTS
Homeowners insurance is an essential part of protecting your home, personal property, and assets — including your pool — against potential damage. A homeowners insurance policy consists of different components including:
Having a pool can affect one or more components of homeowners insurance, depending on your homeowners insurance policy and how your provider classifies the pool.
Owning a pool means one more thing to cover with insurance, which could necessitate increasing your coverage amount or adjusting it accordingly, especially because of the pool’s liability implications as an “attractive nuisance.” An attractive nuisance is an insurance term for a hazardous condition or object that might cause harm to children.
Homeowners insurance may help cover property damage to your pool if it’s caused by a covered peril. A peril is a risk or disaster or cause of loss, and so a covered peril is one that a homeowners insurance policy would cover. These are the same perils that are covered by dwelling coverage, or the main component of a homeowners insurance policy that includes your house and roof. The most common types of covered perils include:
Perils that may affect a pool and aren’t covered include:
How the insurance company pays for any repairs depends on the type of coverage you have, your coverage amount, and deductible. The deductible is the amount you pay out-of-pocket when you file a claim for damages. With a lower deductible, you end up paying less out-of-pocket in the event of a covered loss. But remember: a lower deductible has higher premiums, and a higher deductible has lower premiums.
When you start shopping for homeowners insurance, the first thing you’ll do is set the dwelling coverage amount by taking into account the build price of your home and surrounding structures, including your pool. The build price is not the market value of your home, but rather how much it would cost to rebuild it.
Having a pool would increase your desired dwelling coverage, which would in turn result in higher premiums.
A pool also increases your liability since it opens up the possibility of someone else, like a guest, having a swimming-related injury, like a sprained ankle from running around the pool, or a concussion when jumping into it. Increasing your personal liability coverage would also increase your monthly premium.
It’s important to know how your pool is classified by the insurance company because it will affect how it is covered by your homeowners policy and how much will be paid toward the costs of repair if you file a claim. You can find this information on your declarations page. Usually the first page of your insurance policy, the dec sheet explains your homeowners insurance costs and coverage
Some providers, like Allstate, for example, classify above-ground pools as personal property because it is an impermanent structure that is assembled or constructed and ultimately portable like a bike or computer. These types of belongings are protected against damage and theft under personal property coverage, which is a standard component of a homeowners insurance policy.
In-ground pools are sometimes considered part of your dwelling, in which case they will be covered just like the house or roof. Other times in-ground pools are considered amongother structures, like a shed or gazebo. In this case, you’ll need to explicitly list the pool as an other structure on your homeowner’s policy.
Homeowners insurance pays out damages for both scenarios — whether your policy classifies the pool as personal property or other structures — based as a percentage of your overall dwelling coverage:
Personal property coverage usually constitutes 50 to 75% of your overall dwelling coverage. So if your house is insured for $400,000, then at $20,000 at minimum and $300,000 at maximum could be eligible toward personal property coverage damages, including those to your pool.
In most homeowners insurance policies, settlements for personal property coverage are paid based on the actual cash value of the property item — how much the item is worth after accounting for depreciation, which usually means means less than what you actually paid for it. For example, the above-ground pool your purchased 10 years ago for $15,000 might only be worth $10,000 today. This is how much the insurance company would pay out if you were replacing the entire pool.
If your pool falls under other structures coverage, make sure you list it along with any fences or sheds on your property that you want covered.Other structures coverage is usually 10% of your dwelling coverage. That means if you insured your house for $400,000, your pool would be covered only up to $40,000.
For other structures, you may be paid out the actual cash value or the replacement cost value. Different providers have different stipulations, so again, read your policy and confirm with your provider if you’re unsure. Replacement cost value is the actual cost of repairs. If your pool incurred $5,000 worth of damage, you would receive a check for exactly that amount.
As you can see, personal property coverage is much more robust than other structures coverage. According to Homeadvisor, the average cost of installing an above-ground pool is $16,000, while an in-ground pool will run you closer to $50,000. In the event of pool damage, you'd have a greater claim limit if the pool were classified as personal property as opposed to as an other structure. But it is important to note that the insurance company makes this distinction, not you.
If you don’t think you have enough coverage — whether it’s personal property coverage or other structures coverage — you can consider raising the coverage limit.
A pool is considered an attractive nuisance, or something appealing yet hazardous that will increase your liability. The Insurance Information Institute (III) cites an average of 3,500 unintentional fatal swimming pool-related accidents from 2005 to 2014. Homeowners insurance is typically equipped with $100,000 personal liability insurance, which will cover you for costs like legal fees when a guest is injured in your home.
The amount of liability protection is chosen separately from your dwelling coverage, and the III recommends that pool owners set their liability insurance around $300,000 to $500,000. If you think you need extra coverage, you may want to consider an umbrella insurance policy, an additional liability policy you can tack on to your homeowners policy.
Almost all insurance companies will require that you install a protective fence or gate around the pool. Some carriers may not cover pool-related liability if you have a diving board or pool. In more rare cases, some home insurance providers may simply exclude pools from their coverage altogether. Be sure to check with your provider as this varies by state.
What exactly constitutes a pool is determined by your town. Make sure you’re in compliance with local municipality laws, which may have their own safety and building codes.
Take these pool safety measures to help reduce your personal liability and to help keep you, your family and your guests safe:
Elissa is a personal finance editor at Policygenius in New York City. She writes about estate planning, mortgages, and occasionally health insurance. In the past she has written about film and music.
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