January is National Hobby Month and, depending on what your hobby of choice is, it could have quite the impact on your insurance rates. Hobbies that involve expensive collections like antiques, art, musical instruments, and even guns can require additional insurance coverages – while other, more extreme hobbies, may make finding life insurance a nightmare.
Insurers Calculate Risk
Insurers calculate the risk of an activity, and hazardous activities that may lead to injuries or death are considered high-risk.
As risk increases, premiums increase, if you can find coverage at all. Often times, those who participate in extreme sports may find it difficult or impossible to obtain medical, disability, or life insurance, because insurers do not want to assume the risk.
What Do Insurers Consider High-Risk Activities?
That depends. Every insurer describes which activities they consider hazardous. Consequently, what one carrier will not cover, another might. Some insurance companies consider fishing, hunting, and riding a motorcycle dangerous.
How often you participate in the hobby is a major consideration when an insurer considers granting you coverage, too. If you want protection for a single event or a vacation, they’re more likely to provide it rather than if you participate regularly. Insurers may ask you very specific questions to determine the extent of the risk too, such as how high you’ll climb, how often you jump, or whether you’re a professional.
While no common definition exists, these are some activities most insurers identify as high-risk, but certainly not all. People continue to dream up dangerous activities continually:
- Mountain Climbing / Rock Climbing / Free Soloing / Ice Climbing
- Skydiving / B.A.S.E Jumping / Bungee Jumping
- Scuba Diving
- Cliff Diving
- Flying – aircraft, hang gliders, gliders, paragliders, & balloons
- Racing – automobiles, motorcycles, Kart, or boats
- Skiing – back country & heli-skiing
- Extreme Watersports – white water rafting, bodysurfing, surfing
- Contact Sports – boxing, kickboxing, judo, karate, etc.
- Sky Walking
- Downhill Mountain Biking
- Extreme Holiday Activities -running with the bulls, swimming with sharks, etc.
Travel insurance companies may offer a sports or hazardous activity rider you can add to your policy to extend travel insurance benefits, provided you pay more and leave the country. They typically do not protect you at home.
Don’t think you can omit information about high-risk activities, either. If you’re applying, the insurance company reviews your medical records during the underwriting process. If they uncover an injury from a high-risk activity, they may deny your application.
If they grant you coverage and you’re hurt, disabled, or killed while participating in a regularly practiced high-risk activity you didn’t reveal, they’ll deny the claim. It’s considered fraud, and they can cancel your policy too, and sometimes, have as long as two years to do so.
When You Can Find Coverage
Insurers typically add a flat rate per thousand to your premium if you participate in high-risk activities, such as $5 per $1,000 of coverage and your usual premium. Obviously, this can add up quickly if you’re buying a $500k or $1 million dollar policy.
An article from Nerd Wallet provides a good overview of how it can affect life insurance rates for particular activities for a healthy 40-year-old man seeking a 20-year policy worth $1 million, even though rates may be higher now.
Some professional organizations offer insurance coverage as do specialty insurers, but they usually offer low limits such as $50k or $100k.
Those passionate about high-risk activities need to discuss their coverage with their insurance agent. They work for you and can find you the best rates and coverage possible so you can continue to enjoy what you love to do.
If you occasionally dabble in an adventure or two, they’ll offer many options or in some cases you may already have the coverage you need. However, you need to know. You’ll also need expertise and reach to find suitable coverage when you participate in high-risk activities regularly.