When buying a home insurance policy, most of us may be concerned about the home insurance claim process and the average time taken to settle a home insurance claim. Not many Aussies think about a home insurance claim’s impact on the premium, or the cost of the policy.
As your insurance provider may tell you, your insurance claims history is one of the factors that affect your home insurance premium. Suppose you’ve been buying home insurance for many years and have never filed an insurance claim. Insurance providers may then offer you a no-claims discount, which can bring down your premium.
Does home insurance premium increase after a claim?
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 a higher risk of damage to your home and 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 does home insurance premium increase after a claim may not be straightforward, as insurers aren’t likely to share their risk calculations with you. You may be able to find out about the area’s overall risk of natural disasters or incidents of theft or vandalism from your neighbours or the local council office. Having this information can give you clues about keeping 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 policy coverage based on this information, and minimise the risk of being underinsured as well.
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 policy for your home, 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. Consider checking if another insurer may offer you a lower premium than your current insurance provider, even accounting for any insurance claims made earlier.
How long does a claim affect your home insurance?
In Australia, you need to disclose information about your previous home insurance claims when buying a new policy. If you miss out on reporting any claims, and your insurer finds out later, your insurance claims can be denied. Again, most insurance providers report information on insurance policies and claims to Insurance Reference Services (IRS), which is a national data registry for the insurance industry. The information submitted to 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 affiliated with IRS as a member for your home insurance claims to be recorded in the IRS registry.
You can request a copy of the IRS report called “My Insurance Claim” before buying a new policy to confirm the claims you need to disclose to your insurance provider. You can also review the report and, in case of any errors, ask your insurer to correct these errors by submitting the rectified information to IRS. Note that you won’t be able to request a correction from IRS directly, as the updated information also needs to be provided by the insurer who submitted the original policy or claims data. You may be able to directly request an update of your personal identity information.