Homeowners Insurance & Swimming Pools
So, you want a swimming pool in your backyard? Awesome…nothing better than coming home after a hard day & just diving in and relaxing…or having backyard barbeques with friends around the pool on weekends.
In ground swimming pools have become so much more intricate and elaborate from when I was a kid. Custom waterfalls, built in whirlpools, tanning ledges, etc., and the values of these pools are getting more & more expensive. I’m a big believer in “stress testing” all of the insurance planning I recommend, and several thoughts come into play here. The first is making sure that there is enough coverage to rebuild the pool in the worst possible scenario. In my mind, this is ground shifting due to earthquake or sinkhole. Yes, Tennessee has had earthquakes…most of them are in the western part of the state closer to the Tennessee & Mississippi Rivers, but just like the flood of 2010, they are possible.
Middle Tennessee sits on a sheet of limestone, but yes, there are sinkholes. I would trust that your pool contractor would do core samples to eliminate this risk, but it’s something to consider…and to ask the company you choose to build your pool. Both earthquake and sinkhole coverages are optional coverages to the standard homeowner’s policy but can be added for a minimal additional cost.
With regards to coverage on your homeowner’s insurance policy, a swimming pool is considered to be an Other Structure (or Coverage B) …meaning it’s on the property, but not attached to the home. Normally the amount of coverage is 10% of the value of the main home, or Coverage A. For example, your Coverage A is $250,000. Coverage B for Other Structures is typically $25,000 or 10%. The most prevalent “other structure” I see is a detached garage.
In this scenario, let’s assume that the total reconstruction costs are $75,000. A good insurance advisor will see this and recommend increasing the “other structures” coverage from $25,000 to $75,000. You can always increase Coverage B, but rarely can you reduce it lower than the standard of 10%. There is a caveat here, and that is how claim reimbursement is handled by a majority of the “name brand” companies.
With an other structure such as a detached garage, it can be covered at replacement cost, meaning it’s covered for repair or replacement up to the policy limit at 100%. Other structures which are not buildings, such as your new swimming pool, are covered at Actual Cash Value (ACV), which depreciates the amount the carrier will pay out based on the age and condition of the structure prior to the loss.
With many of the companies that we offer as an Independent Agency, we have companies that will endorse a homeowner’s policy to cover your swimming pool at replacement value. Depending on the age and condition of your in-ground pool, this could be a significant difference in the amount of the claim reimbursement.
That’s the part that protects the repair or replacement of the actual pool. There are two other issues that need to be mentioned, and the first is a fence that is gated and locked surrounding the pool. For most companies, this is mandatory! Talk with your contractor about a recommendation for this. A pool that is not fenced, gated and locked could be declined by an insurance agent for homeowner’s coverage. Yes, the fence is considered an “other structure” as well, so make sure to include the value of the fence with the value of the pool.
The last, but definitely not the least important coverage that needs to be discussed here, and that is a Personal Liability Policy, or “Umbrella”. If I’m still “stress testing” the coverages regarding your new swimming pool, the risk factor for safety and liability increases exponentially.
I remember as a kid, one of my good friends had a pool in their yard. It had a 12 ft deep diving area, and a ladder that went up seemingly forever. We also never rode a bike with a helmet either! That was then. Today, a swimming pool is almost always deemed an “attractive nuisance” and that means you as the property owner has a heightened obligation to keep the pool and surrounding premises reasonably safe for everyone…even if they do not have permission to be on the property. Diving boards and slides fall under this terminology, so make sure to disclose these as well.
An “umbrella” policy is purely lawsuit protection. They come in increments of $1,000,000 and integrate with the liability limits of your homeowners, automobile, boat, RV, motorcycle policies. They are called “umbrellas” because one policy covers over the top of all of these types of personal lines policies. In my mind, everyone needs an umbrella policy because the attorneys on TV constantly tell me “I deserve to be paid”, and they do so by suing insurance companies.
So, to wrap up…here’s what you need to take away…
· Ask your insurance advisor to increase Coverage B, “other structures” coverage to the full value of both the pool and the fencing surrounding it.
· Ask about including Earthquake and Sinkhole coverages to your homeowner’s policy.
· Ask if the pool is covered at Actual Cash Value or can be covered at 100% replacement value
· Purchase no less than $1,000,000 personal liability policy.
I hope this has been helpful in your decision to put a custom swimming pool on your property or purchase a home that already has one. My mantra is based on “Castles & Moats”. Meaning every castle of wealth & assets needs a larger moat of protection around it.” Thanks for reading.
Brian Carden, Insurance Advisor
Elite Insurance Solutions, LLC
2206 21st Ave South, #200
Nashville, TN 37212
615-506-0300 DIRECT LINE