How would your homeowners insurance agency know what breed of dog you have?

The problem will come if you ever get sued because of that dog's actions. The insurer can then decline to defend you or cover your losses.

Well, yes, they ask. If you have a claim, even if it's not dog related, they will notice the dog. If you do have a dog bite claim, then it's a bit obvious. They can ask your neighbors. Usually, if it's a mixed breed, and it LOOKS at ALL, has ANY physical features of the breed, that counts. THEY don't have to prove that the dog is a pitt mix - YOU have to prove that it ISN'T. And if you acquire a new dog, even if it's NOT a pitt mix, if it is at ALL aggressive, they can flat out cancel you anyway, even if it's not a prohibited breed.

The insurance company can do a home inspection, in which they would see the dog. Most companies do look for certain breeds including mixes, and any other animal with a bite history or exotic animals. They don't ask for papers, however if they find you do have one of the black listed breeds and did not mention it on the application (falsifying/misrepresentation an application) the company can non-renew you if they want to. In this case, you now have a limited time to search for coverage and your rates could go up. If you let your company know this upfront and in advance, they might just exclude personal liability coverage on your homeowners policy.

when they issue you a new policy, an inspector is sent out to check the house out. No one wants to insure or invest in a home that is tearing apart, or is located in a hazardous zone. They will cover you, the problem will come when the dog attacks someone and the victim files a claim. The isnurance company may or may not cover you. If they do, shortly after they will kik you out and not insure you again.