Post-Claim Home Insurance Increases Explained

After spotting a small leak in the basement, you’re faced with a $2,000 repair. If it’s your first claim in years, the premium increase might be minimal. However, since water issues are often repeatable, you could see a small bump. It’s worth considering if the long-term premium impact is worth filing.

After two theft claims in three years, your provider might see a pattern, especially if the losses occurred at home. This could lead to a 10-20% premium hike, with the possibility of needing security upgrades for future coverage.

An accidental kitchen fire costs $10,000 in smoke damage. If it’s your first claim, claim forgiveness might keep your premiums stable, but if you’ve filed other recent claims, expect an increase as insurers begin viewing your home as higher-risk.

Your claims history plays a big role in how your premiums are adjusted. The more claims you’ve made, the more your home insurance provider views you as a potential risk, which can lead to higher premiums. 

Insurance companies track your loss history, which includes the details of each claim you’ve filed – which typically stays on your record for 5-7 years. That said, some insurers may look at a shorter or longer period depending on their policies.

This means that even if a claim seems minor, it can still affect your future premiums. Here’s the logic: remember that each claim you make tells the home insurance company something about the likelihood of future incidents, which is why frequent claims can be a red flag for them.

Not all claims are created equal. If you’re filing a claim for something that could easily happen again, such as water damage, theft, or mold, your premium is likely to see a more significant jump. Insurance companies are all about managing risk, so if the claim is for an issue that’s easily repeatable, it could indicate an ongoing problem with the property.

Also, claims that are common in your neighborhood (like break-ins or flood damage in flood-prone areas) may lead to higher premiums because they signal a geographical risk. And here’s something even more important to note: making too many claims in a short period might even lead to your insurer deciding not to renew your policy at all (but this is the worst-case scenario.)

On the other hand, certain claims can even lower your home insurance premiums, like if you had to replace an old rickety roof with a new one that’s more stable and up-to-date. It may seem counterintuitive, but better roofs and structural features mean your home is more likely to run into issues – so there’s no one answer that suits everyone. 

If your home has been owned by others before you, their claim history could influence your premiums. For example, if the previous owner made multiple claims for water damage or break-ins, the insurer might assume the property is at higher risk for these issues.

But don’t worry – there are ways to safeguard against these increases. For example, if you’re living in a home that’s been burglarized in the past, upgrading your home with security features, such as installing CCTV cameras, alarm systems, or reinforced deadbolts, can help lower your risk. Taking proactive steps may reassure your insurer that the home is now better protected.

In Canada, certain provinces have laws that protect policyholders from having their premiums increased after making a claim. 

This is great news because it means you may not be penalized for filing a claim in some regions. However, these laws can vary from province to province, so it’s worth checking what protections are in place where you live. Understanding these regulations can give you peace of mind, knowing that a single claim might not affect your premium depending on where you are.

Each insurance company sets its own standards and policies, so premium increases can vary from one provider to another. Some insurers are more lenient, allowing a certain number of claims before they hike up your premiums, while others might increase your rates after the first claim.

It’s important to read the fine print and understand your specific insurer’s approach to claims and premium adjustments. Some companies offer perks like claim forgiveness, which we’ll talk about next, that can help prevent your premiums from going up after an initial claim.