Insuring the Future
For many pet owners, finding affordable homeowners or renters insurance can be difficult—but the pet industry can help.
One of the mundane but important activities when moving into a new home or rental is obtaining insurance. Although no state law explicitly mandates homeowners or renters insurance policies, most mortgage contracts and many rental agreements require the undersigned to obtain a policy. The reason for this is straightforward: Lenders and landlords want to protect their investment—the property—from unforeseen damages. This can have a significant impact on your current and prospective customers, so it’s worth giving a thought to how we as an industry might work to address this.
What happens when a pet owner is unable to obtain affordable coverage? For pet owners, this question is disheartening and all too real, as companion animals can increase their owners’ premiums, sometimes prohibitively. To justify this, insurers point to their own statistics. Though most pets are well behaved, many insurers have enacted blanket policies that hinder companion animals from living in loving homes.
One method used by insurers to combat pet-based liability is to establish a blacklist of species or breeds deemed too risky to be written into policies. Frequently, owning something on a list is enough to be denied coverage, have current coverage canceled or be refused a renewal. Mixed-breed dogs that contain even a small percentage of blacklisted breeds are also often denied coverage. Exotic pets such as ferrets and certain snakes also face similar discriminatory practices.
The issue at hand is a fundamental lack of knowledge. Until sufficient research is available, it doesn’t make sense to assess pets purely on actuarial data, given the overwhelming benefits of pet ownership. Even if a discriminatory practice could be actuarially justified, there is still an argument to be made that legislators haven’t always enacted insurance law based on the actuarial tables, but rather what is best for the common good. An example would be states that prevent credit scores from being a factor in premium pricing. It’s also worth mentioning that insurance companies that provide health products in addition to home and renter’s insurance may also save money in other departments, due to the estimated $12 billion in yearly health care cost savings associated with pet ownership. As more information becomes available, that is an area to be explored.
There is hope, however. To defend pet owners against uninformed underwriting practices, some states have enacted laws or proposed bills to prevent insurers from denying, canceling or refusing to renew coverage to consumers after being notified of a new companion animal. There have been legislative efforts regarding insurance undertaken in Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Virginia and West Virginia to make homes as accessible to pets as possible. However, these laws generally only focus on a single issue, such as preventing breed-specific discrimination, and are rarely enacted.
New legislation can be a good thing in some cases. While previous bills and laws have been steps in a positive direction, it may be time to consider new, comprehensive state legislation that includes all companion animals by combining many of the positive elements in these proposals. A future bill should take consumer and pet protection into consideration, while also working with state insurance departments to determine best practices within the insurance industry.
This type of legislation could embrace proactive elements, such as preventing excessive liability coverage, as was proposed in House Bill 2852 during the 2009 session of the Oregon Legislative Assembly. If passed, this bill would have required pit bull owners to obtain exorbitant $1-million insurance policies.
There are also reasonable amendments to be made in current statutes in order to protect pets from poorly written legislation. An example is breed-specific legislation that exists in some states and municipalities. Loopholes such as home-rule legislation—legislation that allows for the transfer of authority from state to local government—are utilized to allow counties or cities to enact breed bans regardless of state law. Given the variance of laws state by state, and the differences between state insurance departments, it’s preferable that this issue be addressed on a state-by-state basis.
We should not simply stand by while insurers unreasonably discriminate against pets. When an owner is forced to say goodbye to a companion, manufacturers and retailers say goodbye to a customer. This scenario could also easily discourage prospective consumers from getting a new pet after a change in living conditions.
Yet, this need not be solely an industry effort. Several animal welfare groups recognize the need to remove dog breed as a condition for insurability. By expanding upon this position to include all pets, we can work with a broad coalition of allies to protect pets and pet owners.
Jacob Weinmann grew up in the pet industry. He has recently completed a comprehensive internship with the Pet Industry Joint Advisory Council, which included focused research on the topic of insurance policy as it relates to pet ownership.