Do previous claims affect home insurance premiums?
If you’ve claimed on your home insurance in the past, your new home insurance quote will probably be higher when you come to renew – here’s what you can do about it.
When it comes to home insurance, past claims can cast a long shadow over your future coverage costs. Insurers set prices according to risk, so they will charge you more for cover if they think you’re more likely to make a claim and cost them money – and home insurance providers are no different. Even though it can feel frustrating, statistically those who have made a claim in the past are more likely to do so again in the future. So making a claim can therefore increase the cost of your next home insurance policy and may even make it harder to find cover, even if it was not your fault.
Claim types and their influence on premiums
Not all claims are created equal in the eyes of an insurer. A small, isolated claim may not significantly affect your premiums. However, larger or multiple claims can set off alarm bells for insurers, leading to a steeper increase in your future costs. This is because a pattern of claims suggests an ongoing risk that insurers will want to offset with higher premiums.
Finding coverage with a claims history
If you’re struggling to take out home insurance, there are specialist insurers that offer policies to people in “non-standard” situations. This could include owners of homes affected by subsidence or flooding, as well as those keen to take in lodgers. These insurers understand that traditional policies may not suit everyone and provide alternatives that can help you secure the necessary coverage.
The cost increase after a home insurance claim
The aftermath of making a home insurance claim can be a sobering experience as you face increased premiums. The extent of the increase is determined by several factors, including the nature and frequency of the claims. For instance, an isolated incident may result in a modest premium increase, while ongoing issues like flooding can lead to larger premium hikes.
The necessity of disclosing previous claims
Honesty is the best policy when it comes to informing insurers about your past claims. Failure to disclose this information can invalidate your policy, leading to a refusal of future claims and potentially leaving you without coverage. It's crucial to be upfront with insurers to ensure that you're fully protected.
Insurers' access to past claims through CUE
Insurers have a powerful tool at their disposal: the Claims & Underwriting Exchange (CUE), a database of reported incidents. They can check this database to verify the claims you've reported, making it risky to be dishonest about your claims history. If you want to know what information is held about you, you can find out by completing an online form on the Motor Insurers’ Bureau website. You can also ask your existing insurer for details of your claims history over the last few years (even if you have switched insurance providers during that time).
Duration of claims on insurance records
Home insurance claims linger on the CUE database for six years after they are closed. This retention period ensures that insurers have a comprehensive view of your claims history when assessing your risk. Some insurers may keep claim records for slightly longer, typically between five to seven years.
Impact of no-fault claims on insurance costs
It's a common misconception that no-fault claims won't affect your premiums. However, even if you're not at fault, such as in the case of weather-related damage, insurers may still increase your premiums because the claim indicates a higher risk of future incidents.
Impact of flood claims on insurance costs
And unfortunately for the owners of properties in flood risk areas, a flood claim is one of the types of claim most likely to increase the cost of your new home insurance policy. If your property is built on a flood plain, then there is a high likelihood of it flooding again in the future resulting in an insurance claim.
Managing insurance cost increases after a flood claim
To manage higher premiums after a flood claim, it's essential to compare policies and shop around. This can help you find more competitive rates and offset the cost increase. Additionally, taking proactive measures such as installing flood prevention systems and raising electrical fixtures can also lower premiums.
Preventing insurance cost increases after a burglary
In the unfortunate event of a burglary, it's important to compare policies to prevent the impact on your insurance costs. Other ways to reduce your premiums – and make your home safer – include installing additional security features, such as a visible burglar alarm or better door and window locks. Many insurers will award you discounts of 5% or more if you can prove your home is more secure.
Getting a good home insurance deal with an adverse claims history
Finding good insurance deals despite a history of claims is not impossible. By shopping around and using specialist providers, you can find policies that accommodate your circumstances. Comparison tools are particularly useful in this process, helping you to find competitive insurance options for those with a claims history.
The decision to claim on home insurance
Before making a claim on your home insurance, consider the long-term implications. Small or minor damage may not be worth the excess costs and potential premium increases. Sometimes, paying for repairs out of pocket can be more economical than claiming on insurance.
Please note that this article is for informational purposes only and does not constitute financial advice or recommendations.
"It can be frustrating when you realise that making a claim on your insurance will increase your premiums in the future – even when it wasn’t your fault! Insurers use statistical models and risk profiles to determine the price of your premium, but that doesn’t mean they will all offer you the same price. If your existing insurer is increasing your renewal price, shop around – it’s likely there will be another company willing to offer you a better deal." - Sam Meadows, Journalist
Navigating the waters of home insurance after making a claim can be challenging, but armed with the right knowledge and tools, you can find a policy that works for you. Remember, the key is to shop around, be honest about your claims history, and take preventive measures to protect your home and wallet.