April 22, 2005
DOG BREED RESTRICTIONS IN HOMEOWNERS INSURANCE
By: Janet L. Kaminski, Associate Legislative Attorney
You asked if other states prohibit property insurers from considering a homeowner's dog's breed when underwriting a policy. If so, you also asked what impact the laws have had on the availability and cost on property insurance.
No other state prohibits insurers from considering a homeowner's dog's breed when underwriting a homeowners or rental insurance policy.
Pennsylvania law requires owners of a dangerous dog to have liability insurance of at least $50,000 and prohibits a policy from excluding coverage for any specific dog breed. The law does not prevent an insurer from setting premium rates to reflect the risk presented by the dangerous dog, which is defined generally as a dog that has attacked a person or domestic animal without provocation. The law does not prevent an insurer from underwriting the risk associated with a dog that does not meet this definition. Pennsylvania case law, in a ruling on whether canceling a policy based on a dog's breed is an unfair insurance practice, holds that a dog's breed does not justify canceling or not renewing a policy unless there is proof that the particular dog creates a “substantial increase of hazard” in the risk assumed by the insurer (i.e. it is a dangerous dog).
Virginia law permits insurers to exclude from a homeowner's policy coverage for any liability caused by a dangerous animal, but only with the insured's written and witnessed consent. A dangerous animal is one that has bitten, attacked, or inflicted injury on a person or a companion animal. Animal breed does not determine if the animal is dangerous. The law does not prevent an insurer from underwriting the risk presented by a dog that does not meet the dangerous animal definition. Such underwriting can result in increased policy premiums or refusing to issue or not renew a policy, according to Mr. George Lyle of the Virginia Bureau of Insurance.
Connecticut is considering legislation this session that prohibits insurers from setting policy rates or canceling, not renewing, or refusing to issue a policy based on an insured's dog's breed, but permits such actions based on a three-year claims history related to or a risk evaluation of the particular dog (sHB 6543). At least eight other states are considering legislation this session that would prohibit or restrict insurers from considering a homeowner's dog's breed when underwriting a homeowners or rental insurance policy: Hawaii, Maine, New Jersey, New York, Oregon, Tennessee, Washington, and West Virginia.
Dangerous Dog Law
Many states have a dangerous dog law, regulating when a dog owner is liable for injuries caused by their dog, how dangerous dogs must be contained, and whether harboring a dangerous dog is a crime, among other provisions. In some cases, the laws require owners of dangerous dogs to carry certain liability insurance.
Pennsylvania's dangerous dog law requires an owner to maintain a surety bond in the amount of $50,000 payable to any person injured by the dangerous dog or a liability insurance policy that includes at least $50,000 coverage for any personal injuries inflicted by the dangerous dog (3 Pa. Cons. Stat. Ann. § 459-502-A).
The law defines a “dangerous dog” as a dog that has done one or more of the following:
1. inflicted severe injury on a human being without provocation on public or private property,
2. killed or inflicted severe injury on a domestic animal without provocation while off the owner's property,
3. attacked a human being without provocation, or
4. been used in the commission of a crime.
In addition, the dog must have either a (1) history of attacking people or domestic animals without provocation or (2) propensity to attack people or domestic animals without provocation. (A propensity to attack may be proven by a single incident of the conduct described in 1, 2, 3, or 4 above.)
Pennsylvania's dangerous dog law also includes an insurance discrimination prohibition, which became effective in 1990. A liability policy or surety bond issued to satisfy the dangerous dog act or any other act cannot prohibit coverage for any specific dog breed (3 Pa. Cons. Stat. Ann. § 459-507-A(d)).
Pennsylvania law makes canceling a homeowners insurance policy that was in force for 60 days or more or refusing to renew such policy an unfair insurance practice unless (among other things) there has been a substantial change or increase in hazard in the risk assumed by the insurer (40 P.S. § 1171.5(a)(9)). A “substantial change or increase in hazard” is a risk that the insurance company could not have reasonably been presumed to have contracted for when the policy was written (Erie Insurance Exchange v. Insurance Department, 564 A.2d 1312 (1989).
Case law holds that “the mere presence of or introduction into a home of a dog, even of a breed known to be aggressive, is not a basis for finding a substantial increase of hazard absent some showing that the particular dog creates that risk” (Aegis Security Insurance Company v. Pennsylvania Insurance Department, 798 A.2d 330 (2002)). In Aegis, the court cited precedent that the standard to apply in determining whether an incident involving a particular dog is a substantial increase in hazard is whether the dog was provoked. If the dog was provoked, then no increased hazard exists. If the dog attacks without provocation, then there is an increased hazard.
It appears, therefore, that if an insured comes to harbor a dangerous dog (as defined above) after his insurance policy takes effect, then an insurer could later cancel or not renew the policy citing that the dog represents a substantial increase in hazard.
Virginia enacted a law in 2004 that permits insurance policies to exclude coverage related to dangerous or vicious animals under certain conditions (Va. Code Ann. § 38.2-2128). Effective July 1, 2004, an insurer that issues or delivers a new or renewal policy to insure an owner-occupied dwelling can, with the insured's written and witnessed consent, exclude from coverage any liability resulting from an injury caused by a dangerous or vicious animal owned by or in the care, custody, or control of the insured. A dangerous or vicious animal is one that has bitten, attacked, or inflicted injury on a person or a companion animal. The insurer is not required to obtain the insured's written consent for any subsequent policy renewal.
Connecticut sHB 6543, File 253, (2005 Sess.) prohibits personal risk insurers from considering an insured's dog's breed when setting policy rates or minimum premiums. It also prohibits such insurers from using the dog's breed as the reason for canceling, not renewing, or not issuing a policy.
But, the bill permits such insurers to set rates and premiums and cancel, not renew, or not issue a policy based on (1) a risk evaluation of the insured's dog or (2) claims paid because the insured's dog bit or attacked a person or animal during the three years immediately preceding the policy renewal or issue date.
Personal risk insurance includes homeowners, tenants, private passenger automobile, mobile home, and other property and casualty insurance for personal, family, or household needs. The bill applies to personal risk insurance policies delivered, issued for delivery, renewed, amended, or continued on and after October 1, 2005.
The bill was favorably reported by the Insurance and Real Estate Committee and is currently on the House Calendar (No. 227).