Information provided by the Insurance Information Institute shows why a significant number of insurers issue homeowners policies with animal liability exclusion endorsements. In fact, the Insurance Services Office (ISO) has rolled out a “canine exclusion” endorsement in the 2011 Homeowners program.

 

Each year in the United States, there are about 4.7 million injuries from dog bites. Of those, 900,000 bites require medical treatment and 50% of bites happen at the residence where the dog lives. In addition, 33% of all dollars paid out for homeowners policy liability coverage can be attributed to dog bites: $412 million was paid by insurers for dog bites in 2009, and the average dog bite claim was more than $24,000.

 

While the standard ISO homeowners policy has no exclusion for animal liability claims, there are two points to keep in mind. First, as mentioned earlier, ISO has introduced a “canine liability exclusion” endorsement that insurers are able to use if desired. The endorsement applies only to dogs and furthermore only to the dog(s) described in the schedule. Second, it is not uncommon to find carriers with their own company-specific animal liability exclusion, which often excludes all animals owned by an insured or in the care of an insured.

 

Therefore, since some homeowners policies do not cover animal liability—or in the case of ISO, canine liability—it begs the question of how personal umbrella and excess liability policies respond for dog bites and other animal liability claims.

 

It’s important to remember that excess liability policies are known by various names and all respond differently. Each policy is different and no analysis of a claim can take place without reading the policy. How an excess or umbrella policy responds to an animal liability claim (or any claim for that matter) depends on the type of policy in question.

 

An umbrella policy—sometimes called a “broad form umbrella”—typically increases the underlying policy limits by $1 million or more. In addition, it provides coverage for some claims that the underlying policies do not cover. Relating to animal liability claims, therefore, it’s possible that some umbrella policies would respond for an animal liability claim, even if excluded by the homeowners policy.

 

This is often referred to as a “drop down provision.” In such a circumstance, a “Self Insured Retention” or “Retained Limit” applies, typically $250 to $1,000 on personal umbrella policies. Each umbrella is different so it’s important to read each policy to determine coverage.

 

A following form policy exactly tracks the underlying policies in all respects. Therefore, if the homeowners policy covered an animal liability claim so, too, would a following form policy. Likewise, if the homeowners policy excluded an animal liability claim, the following form policy would also exclude the claim. Each following form policy is different so it’s important to read each one to determine coverage.

 

An excess liability policy typically provides only higher limits of liability above the underlying policies and does not cover claims that are excluded by the underlying policies. It’s possible, however, that an excess liability policy would exclude a claim that would be covered by an underlying policy.

 

As it relates to an animal liability claim, an excess policy would typically respond only if the underlying policy also responded. Even if the underlying policy did respond, the excess liability could exclude the claim. Each excess liability policy is different so it’s important to read each one to determine coverage.

 

If the underlying homeowners policy excludes an animal liability claim, the most likely policy to respond is the umbrella policy. As pointed out earlier, each umbrella is different. Some umbrella policies will cover animal liability claims that are excluded by the homeowners policy (subject to the Self Insured Retention), while others will exclude them.

 

Agencies looking for a stand-alone animal liability market can look to various sources for the coverage.

 

So, put a muzzle on Rover, read the policies and hope for the best.