Don’t set off a Fourth of July home insurance claim

Gina Roberts-Grey

Celebrating Uncle Sam’s birthday this Fourth of July usually includes awe-inspiring fireworks displays and gobbling up plenty of barbecue. But if you’re not careful, you could set off a series of events that result in filing a home insurance claim that could put your rates and renewal status in jeopardy.

Here are some insurance scenarios that could make your Fourth of July celebration a dud.

You set off a fire on your roof

Your backyard fireworks go awry; fireworks land on your roof instead of exploding over it. Your sizzling shingles leave you wondering whether your home insurance policy will provide coverage or whether you’ll be left holding the financial bag.

Greg Hughes, vice president of property and casualty insurance at Poms & Associates Insurance Brokers Inc. in California, says your homeowner’s insurance policy probably would cover the resulting claim, but you’d have to pay any related deductible.

However, if your stint as a pyrotechnic engineer was illegal — your community doesn’t allow fireworks displays in neighborhoods — your claim could fizzle out. “Insurance probably won’t cover the claim then,” says Charlie Schein, owner of Star-Schein Insurance Agency in Connecticut.

A claim like this definitely could affect your rates and policy renewal.

“There would be a claim surcharge — an additional amount tacked as almost like a penalty — of 5 percent or more applied to the policy at the next renewal,” Hughes says.

Schein says: “The surcharge for this type of claim could be in effect for approximately 3 years, depending on the insurance company.”

The insurance company could go as far as not renewing your policy, Hughes says.

Your fireworks set your neighbor’s house on fire

Your backyard pyrotechnics display is known as the best on the block — until a stray bottle rocket lands on your neighbor’s roof and sparks a fire. Although your neighbor’s house is the one that was damaged, your home insurance company ultimately will pick up the tab.

If fireworks are legal in your community, Schein says, your neighbor can file a claim with his own insurance company or with yours. If your neighbor files a claim with his insurer, the company would try to recover the costs from your insurance company, he says.

If the claim is covered by your insurance company, a deductible would not apply because the claim is from someone who’s not on your policy, says Eustace L. Greaves Jr., owner of The Bridge Insurance Agency in New York. However, if the claim is covered, you should expect surcharges to be tacked on to your policy or your policy to not be renewed, Hughes says.

In neighborhood fireworks are banned in your community, Hughes says, this claim might not be covered under the “intentional acts” or “criminal acts” clauses listed in homeowner’s insurance policies. These clauses pertain to situations like arson but also could apply to an accidental fire.

Your cookout makes people ill

You’re known around town for your superb potato salad. But a day in the sun turns the mayonnaise foul, and the bad potato salad sends all of your guests to the ER for treatment of food poisoning. Could your family and friends look to you to foot the medical bills? Yes.

“This claim would be covered by the ‘medical payments to others’ portion of a homeowner’s or renter’s policy, which pays if someone is sick or hurt on your property – regardless of who might be at fault,” Schein says. “The amount of available coverage varies based on the limits a homeowner chooses when buying the policy.”

If a guest becomes ill a few days after eating your potato salad, you still could be on the hook. “This coverage pays the necessary medical expenses that are incurred within three years of the accident. It will also pay for funeral expenses,” Schein says.

The personal liability portion of your home insurance policy would cover legal expenses — up to the limit outlined in your policy — if a guest who became ill takes you to court.

A claim surcharge probably would be slapped on your policy following this claim and would remain in effect for three years. Greaves estimates the surcharge could range from 5 percent to 10 percent.