The Insurance Industry Continues its Fear Mongering of Dog Dangers

This week, the Insurance Information Institute continued its fear mongering about dog bites with yet another report on the "rise" in dog bite claims.  The press release has been picked up by 40 or so media outlets -- featuring headlines like "Dog Bite Claims grab record insurance chunk".  Featured in the articles is the news that dog bite claims topped $412 million last year, and the cost of claims has risen 30% since 2003.   Dog bite claims also make up 1/3 of all liability insurance claims.

Scary stuff, right?  Well, not really.

If you dig behind the numbers, it's really not all that scary.

In 2003, there was a grand total of 16,919 dog bite claims. In 2009: 16,586.  The numbers have varied over the years, but there hasn't been some rash increase in dog bite claims-- in fact, there are fewer now than there were 7 years ago -- in spite of the fact that dog ownership has increased about 14% over that time frame and the US Population has grown nearly 10% over that time. So with over 43 million owned dogs in the US, only .03% of them were involved in any type of dog bite claim last year.

While it's true that the average claim has gone up over the past 7 years (claim value is up 27% over that time), much of it is driven by average health care costs -- which have risen at a rate of 8.7% a year over the past decade. That means they've gone up 79% over the past 7 years for those who are counting -- far less than the 27% for dog bite claims over the same timeframe.  Meanwhile, the insurance industry has more than made up for it....cost for home owners insurance premiums are up 32% since 2003.

And while dog bites do make 1/3 of home owners insurance liability claims, liability claims, as a whole, make up only 6% of all claims.  So dog bites make up only 2% of total home owners insurance claims, even though 40% of the population owns dogs.

While the insurance industry seems to want to create fear and hysteria around dog bites, there is really very little evidence of any growing problem with dog bites -- only with the increasing cost of health care (which no one is disputing).  Dogs continue to be incredibly safe.

Meanwhile, there is one other very interesting note from the news sources.

According to the article from the Chicago Tribune, State Farm Insurance paid out $90.1 million in dog bite claims -- 21.8% of the total dog bite payments. Interestingly, State Farm makes up 21.6% of all home owners insurance premiums written. So while many insurance companies deny people insurance based on the breed of dog people own, State Farm does not. And while State Farm does not discriminate, they are not more likely to pay out in dog bite claims than their market share would indicate that they should.

Comments

[Carianne]

I find these numbers fascinating. I think they should also report that many insurance companies don't cover certain breeds bites so what breeds are making up all of these claims? My understanding, after we just changed our insurance because of breed specific language, is that they can say they will cover you but if your dog bites and a claim is filed, it goes to underwriting and they can deny it here based on breeds that are not covered. This means they would not pay for these claims. So, again what breeds are doing bites to the tune of $412 million since some breeds are not covered?

[Brent]

Of course Carianne that would be interesting (particularly for those insurance companies that do discriminate). Of course, while it would be interesting, we know it's not the breeds of dogs that are at fault, regardless of which ones were responsible.

[Dogteacher]

I recently changed my homeowner's policy, and found that the new company has ZERO dog restrictions - not for breed, size or number of dogs. I was stunned! The company is Farmers Insurance. Spread the word.

[Brent]

Farmers and State Farm are great. I know there are others that don't have breed restrictions, but these two have really been consistently great in our area.

[cheshire]

Gee, this is going to make me sound like a shill for the insurance industry, but:

not all dog bite claims are paid out of homeowners insurance, some are paid out of PLUP (personal liability insurance). PLUP is a separate policy from homeowners. I personally bought a PLUP policy when I planned on getting a dog.

Second, dog bites are likely a rounding error on the factors that determine the cost of homeowners insurance. If you live in the great plains, wind / hail is probably the big cost driver. Live in California? Wildfires, mudslides, and earthquakes. Gulf Coast and Florida, hurricanes. So it's unlikely that our furry friends are the driver behind the high cost of homeowners insurance.

And on a cynical note, if you accept the premise that the insurance industry is whipping up fear over dog bites, it may because they want to sell you something.

[Brent]

Cheshire - you DO sound like a shill for the insurance industry :)

Yes, I realize that in the grand scope of everything, dog bites are just a spec of what insurance companies pay out (and is virtually a nonfactor in their rates). And YET, it's amazing that some still discriminate against certain dog breeds and that they continue sending out their major press-releases about how much money they're spending on dog bite claims.

It's maddening, because they're creating unneccessary fear over something that isn't really a major problem in the grand scheme of things. And yes, I gladly accept your cynical note :)

[KateH]

Please don't give State Farm a blanket pass as non-discriminatory. Every agent can decide if they want to exclude any breed from coverage. I'm going to have to get personal liability coverage because my friend won't get another agent (a friend) and he will not cover Dobes, Rotties, and a few other breeds along with the dreaded 'pit bull.' I want to foster for a Dobe rescue, so I'll be talking to Farmer's for my own coverage.