insurance

Protect Your Finances From Dog Bites

If you don't have enough insurance coverage, you might have to cover the costs when your pet injures someone.

If you've been busy planning a Memorial Day cookout or preparing to travel over the long holiday weekend, it might have slipped your mind that it's National Dog Bite Prevention Week. Or maybe you didn't even know there was such a week (I didn't, either, until recently). Considering this annual event is designed to increase awareness about the serious issue of dog bites, I thought it would be a good time to let you know how this matter could affect your finances.

QUIZ: Are You Covered?

You could be held liable if your dog bites someone. In some states, the owner isn't held liable for the dog's first bite. But many states have moved away from the one-bite rule and consider the owner automatically liable for any injury a dog causes. Pet owners who are considered legally responsible for an injury typically have to reimburse the injured person for medical bills, lost wages, pain and suffering, and property damage.

Homeowners and renters insurance policies usually provide dog-bite liability coverage. In fact, insurance companies paid more than $489 million in dog-bite claims in 2012, according to the Insurance Information Institute and State Farm, and the average claim cost $29,752. But considering that some lawsuits end up costing hundreds of thousands of dollars, the insurance coverage you have might not be enough to pay for all the legal and medical bills if your pet injures someone.

The standard homeowners policy usually provides $100,000 to $300,000 in liability coverage. If a dog-bite settlement exceeds that limit, the dog owner must cover the difference. The greater a person's assets, the higher the risk of a costly lawsuit, according to III. That's why some people should consider getting an umbrella liability policy. For about $200 to $400 a year, you can get $1 million of liability coverage (see Why You Should Have Umbrella Liability Insurance for more information).

Also, if your pet does injure someone, your insurance company may charge a higher premium or exclude the animal from coverage, according to III. Some companies require owners to take their dog to behavior-modification classes in order to get coverage for the pet. And some insurers ask homeowners with pets to sign liability waivers for dog bites. For tips on preventing dog bites, visit the American Veterinary Medical Association Web site.

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