Do home insurance claims follow you?

Among the discounts insurers may offer you when buying home insurance is a no-claims discount, which is a reward for taking care of your home and not filing any insurance claims whatsoever. On the other hand, if you’ve filed one or more insurance claims in the past, insurers will probably gauge you as a higher risk customer (likely to file more claims) and therefore charge you a higher premium.

They may also check your ability to maintain and protect your home as needed, particularly from incidents more likely to occur in your neighbourhood. You may need to take additional precautions - such as fireproofing or security measures - or pay for extra insurance coverage.

Estimating how much your home insurance premium may increase after a claim is not necessarily straightforward, as insurers aren’t likely to share their risk calculations with you.

Whether your insurance premium goes up after a claim really depends on the situation. In some cases, your premium won't increase, even if you've made a claim on your policy.

Some types of claims have a bigger impact on insurance rates than others. You can probably expect a rate hike after a claim if you fit into any of these categories:

• Living in an area prone to extreme weather
• Having a home in a high-crime neighbourhood
• A history of filing liability claims
• Owning a house that's had a number of claims against it
• Making multiple claims over a few years

If you file a liability claim, your insurance premium is more likely to jump compared to a property damage claim. Liability claims can potentially lead to lawsuits, which means you and your insurance company could be on the hook for legal costs and settlements, adding extra risk to the mix.

You may be able to find out about your area’s overall risk of natural disasters or incidents of theft or vandalism by speaking to your neighbours or the local council office. Having this information can give you clues as to how to keep your home in top condition for longer, thereby lowering the chance that you’ll need to file a home insurance claim. You can also customise your home insurance coverage based on this information, and minimise the risk of being underinsured. 

While you may not want to file an insurance claim, you should know about the impact of doing so on your insurance premium. When shopping for a home insurance policy, insurance claims reviews may help you gauge how insurance premiums vary for those with a prior claims history. You may find reviews when comparing home insurance quotes online, but you can also ask friends or family members about their experience. It may be worthwhile checking if another insurer might offer you a lower premium than your current provider, despite any previous insurance claims you’ve made in the past.

Claims can remain on your record for several years but this duration can vary depending on your insurance provider. Once this time elapses, your insurance premium should decrease, although it might not revert to its initial rate.

In Australia, you need to disclose information about your previous home insurance claims when buying a new policy. If you fail to report these claims, and your insurer finds out later, your future insurance claims may be denied. 

Many insurance providers report information on insurance policies and claims to the Insurance Reference Services (IRS), which is a national data registry for the insurance industry. The information submitted to the IRS includes home insurance, car insurance and personal insurance, with data on insurance claims maintained for ten years. However, your insurance provider needs to be an affiliated member of the IRS for your home insurance claims to be recorded on the registry.

You can request a copy of your IRS report, known as “My Insurance Claim” before buying a new policy to confirm all of the claims you need to disclose to your new insurance provider. You can also review the report and, in case of any errors, ask your insurer to correct these mistakes by submitting the rectified information to the IRS. You won’t be able to request a correction from the IRS directly, as the updated information also needs to be provided by the insurer who submitted the original policy or claims data. However, you may be able to directly request an update of your personal identity information.

If you’ve remained with the same home insurer for a number of years, you may be able to negotiate a discount for your loyalty. Often the insurer won’t want to lose your business and might offer a premium reduction. Even a small discount of 5-10% off your premium can save you a fair amount of money.

Some insurers will even offer no-claim bonuses or discounts for customers switching insurers if you can prove your lack of claims history. Obtaining a copy of your insurance claims report from the IRS can help provide this information. Additionally, you can also request this information from your previous insurer/s.

Don’t be afraid to contact your insurer and haggle the price of your premium if you’ve been a loyal customer and haven’t filed any claims. It’s always worthwhile investigating whether or not you’re eligible for a discount, and there’s no harm in trying to reduce costly premiums.