Does Making A Claim on Your Home Insurance Affect Your Premiums?

Young couple sitting with an Insurance Adviser going over their home insurance policy

April 12, 2019. Home insurance is based on different factors than auto insurance and it is hard to determine what will and will not change your premiums due to the hundreds of factors that are considered when calculating your peril score. Home insurance risk and the associated costs are based on location, building attributes, neighborhood trends, and much more.

While making a claim will not affect your current premium, the frequency of claims will affect your peril score. From the insurance company’s perspective, how often you make a claim against your policy will determine the risk factor associated with insuring you. This is something that can vary greatly depending on your location and the type of damage. For example, hail damage claims in Alberta (a hail prone area) will raise your premium if repeatedly claimed by you or by an increased percentage of homeowners within your municipal district, county or city/town. In contrast, a burst pipe or water heater would be unlikely to raise your premiums unless it has happened (and been claimed) repeatedly.

A variety of opinions exists on what is a safe frequency to file claims without increasing your rates, but generally, one or two claims per decade should not increase your premiums unexpectedly.

You may want to consider saving your home insurance claims for large, expensive incidents and leaving lower-cost damage to be covered out of pocket to avoid paying a deductible and facing a possible premium hike.

What happens if you make frequent claims?

Consequences vary but can include:

A reduction in your benefits
Your policy being canceled
Your insurance rate increasing
Having difficulty finding a new insurer

Should you make a claim?

Some factors to consider are:

Is the damage much higher than your deductible? It might not be worth the hassle and risk of your premium going up to claim a $700-$900 item if your deductible is $500, for example. If you are not sure whether to make a claim, call your insurance company and find out whether it is worth it or not. Home insurance is meant for large losses that you are not able to pay for yourself and it’s probably best not to claim smaller losses.
Check your policy to make sure the claim would be covered. Look for coverage limits and exclusions.
How often have you made claims in the past? You should be able to make 1 or 2 claims every ten years or so without a rate increase.
If someone got hurt, you should always file a claim. The injured party could sue you months or even years later and if you do not file a claim immediately, your insurance company will not help with legal representation or pay for a settlement.
Claims resulting from gradual deterioration or a lack of maintenance will not be covered.

Claims protector policies

You can opt for a home insurance claim protector option with many insurance companies. This mitigates the risk of making a claim and assures you of unchanging premiums if you must make a claim. These additions will usually cost $30-50 a year.