How a Pool Affects Your Home Insurance

Ah, the joys of a pool. Cooling off after a hard days work. Having a party with friends. Perhaps you've lined up the contractor and the pool supplies, maybe even planned that party. But heres something to consider: Do you have the right insurance coverage for that wonderful new backyard accessory?

The first thing you have to do is check your existing homeowner policy. Does it make any mention of pools or coverage for pools? It may even be listed among the exclusions on the policy, which means you definitely need additional coverage. Usually, your pool will be covered under other structures. Do you have coverage for other structures?

Why check your policy? The main reason is to confirm that your basic homeowner insurance provides you with these two things:

  1. Coverage for damages to your home and other structures on the premises (like your prospective pool)
  2. Liability protection in the event someone sues you

If I've got this, arent I okay? Yes and No. You should always notify your insurance agent that a pool has been installed, just to be sure that there won't be any problem. However, once you have a pool installed, you are more likely to have to call your insurance company because of the kinds of risks, both in terms of damage and liability that comes with a pool. Since you are increasing the risk to your insurer, you can assume it will cost you more money in premium. It may not be a substantial increase, depending on your insurer, but there will generally be an increase.

Are you sure you have enough coverage? This is an important question. If you want to get the right coverage, you'll have to consider your situation and your needs. Lets talk first about damage to your new pool.

A pool is considered separate from your dwelling, so it's usually covered under the category of "other structures" on your policy. The standard amount of insurance for such items is 10 percent of the coverage amount for your dwelling, though some policies will provide up to 20 percent. So the biggest issue is whether this amount of coverage is sufficient to cover the cost of your new pool.

Lets say you have a home worth $150,000. You have the standard coverage for other structures of 10 %. This would give you $15,000 for your pool and anything else separate from your house. Continuing with the above example, if your pool cost $14,000 and you also have a detached garage worth $10,000, plus a gazebo overlooking your pool worth $6,000, you've got $20,000 in separate structures. This calls for a change in your insurance coverage.

So what kind of damages are covered for your pool? The most common homeowners policy in the United States will protect your pool from all perils except those specifically excluded in your policy. However, some insurance will only protect your pool against some 17 named perils specifically listed. Check the details of your policy and be prepared to make changes in your coverage if required.

Some kinds of damage are not covered under any policy. One somewhat common occurrence can be damage to your pool by freezing, thawing, pressure or weight of ice or water. This is generally not covered and is considered the responsibility of the owner of the pool. If you live in colder climates, make sure your pool is properly "winterized" to avoid such damage.

Now that weve discussed damage coverage, lets turn to liability. Liability issues relating to your pool are what tend to give both insurers and homeowners the biggest headache. While it may be hard to believe, every year approximately 45,000 people are injured in swimming pools and nearly 300 people drown in backyard pools alone. So great is the risk of death or injury, some companies won't even cover you at all if your pool has a diving board or slide! It's this increased risk that is also likely to cost you more money in premiums for your liability coverage.

However, you should consider increasing your liability, regardless of cost. Lets face it: if you have only $100,000 in liability on your standard homeowners insurance, is this enough if the unthinkable happens in your pool? When you install a pool, you increase the chance that you will be sued if someone is injured or killed as a result of using your pool (even if such use was without your permission). This is what liability coverage is all about. It protects you if someone is hurt or injured on your property. So, even with higher costs, you should be considering increased liability coverage.

Most homeowner policies pay up to $100,000 each time someone makes a legitimate civil claim against you, although some basic policies will have higher liability limits. Even if your limit is already higher than $100,000, you might want to consider more. If the claim against you is more than your liability coverage limit, then you are responsible for the difference. A big claim could spell financial disaster.

There are two ways to increase your liability coverage. First, you can simply purchase higher liability coverage limit's on your existing policy. This is the easiest way and it's usually relatively inexpensive.

Second, you can buy a stand-alone liability insurance policy called an "umbrella liability" policy. This will be separate from your home insurance. A standard umbrella liability policy will give you $1 Million in coverage against claims. As a new pool owner, you should generally qualify for an umbrella liability policy, given your increased risks.

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