14 Aug 2020 Swimming Pools and Insurance: What You Need To Know
Did you get a quarantine pool this summer? You aren’t the only one.
During the stay-at-home orders following the COVID-19 outbreak, many families invested the money they would have used on vacation on new pools to create the ideal stay-cation environment.
We saw it firsthand. At Berry Insurance, many of our clients who installed new pools this year reached out to us, inquiring if it was covered on their homeowners insurance policy, or if they would need to buy more insurance.
We tried not to rain on their figurative pool party too hard (even though we were a tad jealous of their new additions), but we did inform them it was possible that they would need to increase their insurance to account for the new investment and associated new risks.
If you’re in the same boat (or pool raft) as these clients, read on to learn more about the areas you may need to adjust your personal insurance to avoid a costly claim.
Is my swimming pool covered under my homeowners insurance?
Yes, if you have a swimming pool on your property it is covered on your homeowners policy.
Specifically, it is covered under the “other structures” section of your homeowners policy, which covers structures including detached structures such as sheds, fences, driveways, detached garages, and of course … swimming pools.
This means, damage to your swimming pool from covered incidents such as storms or fires will be covered up to your other structures limits.
However, even though your pool is covered under your other structures coverage, you may need to make some adjustments to your homeowners insurance.
Places you may need to adjust homeowners insurance for your swimming pool:
Your pool is a large investment that is supposed to add fun and relaxation to your life. But before you dive in (pun intended), you need to make sure you are securing your investment with the proper insurance so you aren’t facing a stressful claim and significant financial hardship. Below are some of the steps you may need to take.
Notify your insurance company
Although there may be many areas you need to adjust your insurance, when you get a pool, the bare minimum you need to do is notify your insurance company so they are aware of the added exposure.
If your pool is a complex, valuable addition, your agent may suggest you increase your coverages. If it is an inexpensive, temporary above ground pool, just notifying your agent may be sufficient.
Increase other structures coverage
As a rule of thumb, other structures coverage is usually set at 10-20% of the value of your dwelling coverage limit. If the other structures limit does not cover the total value of your pool, you may need to buy additional insurance.
For example, if your dwelling coverage is $300,000, your other structures coverage limit may be $30,000. If your pool would cost $50,000 to replace, your coverage would not fully cover it.
In this case, you may want to pay for extra other structures coverage specifically assigned to the pool to ensure it would be completely covered in a disaster.
Increase liability insurance
When you have a pool, in addition to damage of the pool itself, the other insurance-related issue you have to worry about is injuries to people.
Pools can be dangerous. With wet surfaces, drowning risks, and running/jumping in and around the pool, there is certainly an increased risk of injuries.
To better cover this risk, you should consider increasing your personal liability coverage on your homeowners policy (preferably to the maximum of $1 million if it isn’t already.)
Personal liability coverage (included in your homeowners policy) covers damages if someone else is injured on your property.
If someone were to get hurt in or around your pool, paying for medical bills and legal fees could reach or even exceed $1 million, so the additional coverage is essential.
Get umbrella insurance
Even if you max out your insurance on a pool-related claim, it still might not be enough! Since a pool is an additional exposure, we always recommend personal umbrella liability insurance.
What is umbrella insurance?
Sometimes known as excess liability or personal liability, umbrella insurance supplements a policyholder’s existing liability coverages, such as auto, homeowners, renters, and condo insurance. It offers an extension of the policyholders existing coverages.
Umbrella insurance covers the costs of damages or legal defenses arising from incidents leading to property damage or injury when the policyholder is considered responsible.
Specifically, it protects you and your assets if you are found liable for damages beyond what your underlying policies will cover.
Umbrella kicks in when other forms of insurance, (auto, home, renters, condo) have been exhausted.
With rising medical costs and legal fees, umbrella insurance is often a financial life-saver when it comes to unexpected, high-cost claims.
How much does umbrella insurance cost:
Many people decline umbrella coverage to save a couple bucks because they think they don’t need it, and we get it! The situations umbrella insurance would cover are rare, and chances are, you will never need to use your umbrella insurance (and we really hope you don’t). BUT, if something unexpected did happen, wouldn’t you rather have an insurance policy pay instead of your wallet (or worse, future earnings)?
We always say, if you have a pool, the extra protection is always worth the cost.
Costs of personal liability umbrella policies range based on various factors such as (number of properties, number of autos, driver history, number, age and experience of drivers, number of watercraft/snowmobiles, etc.), but a $1 million policy may cost between $160 and $300 per year.
As you increase policy limits beyond $1 million, the premium cost increases in smaller increments.
For example a $2 million policy might only cost 1.8 times the cost of the million dollar one (rather than double), a $3 million dollar policy might cost 2.55 times the million dollar policy (rather than three times) and a $10 million dollar policy might cost 8.9 times the million dollar policy (rather than ten times).
Swim with peace of mind
Your pool is supposed to enhance your life. It should be a place to unwind, exercise, cool off, and spend time with your loved ones.
The last thing you need is a pool-related incident to cause stress, hardship, or set you back financially.
By reviewing your homeowners insurance policy and making appropriate adjustments, you can rest assured your pool will solely serve its purpose of fun and relaxation.
While you’re at it, it may be a good time to review all of your personal insurance policies. A lot can change in a short amount of time, so you want to make sure your policies keep up with life’s changes and aren’t hiding any gaps in coverage.