How Does Your Claims History Affect Your Home & Auto Insurance?
January 30, 2024
The process that goes into determining your Home or Auto Insurance costs can be complex, with insurance providers looking at factors like your age, the model of your car, the location of your house, and your claims history. But exactly how much does one claim impact your premium? And what can you do to make sure you’re always getting the best coverage for your needs, at the best price?
Think about it: for insurance companies to remain in business, the amount of money they pay out for claims can’t exceed the amount of money they’re bringing in from premiums. Reviewing your claims history helps your insurance provider get a sense of your risk profile and what they could potentially expect from you as a driver or homeowner. Keep reading to learn more about the relationship between your claims history and your insurance rates—and how you can save on Home & Auto Insurance, even with a few claims under your belt!
How does my claims history affect me?
Submitting a claim can significantly impact your premium cost during the renewal process. If it’s your first claim ever or the first one in a long time, you could also lose your claims-free discount on either your Home or Auto insurance. Racking up a history of multiple claims could even result in denied or reduced coverage in the future!
While we can’t always control our claims history, familiarizing yourself with the details will help you avoid sticker shock and give you a better idea of what to expect when you’re shopping around for an insurance policy. Here are a few of the different ways in which past claims could influence your insurance:
1. The fewer claims, the better.
In an ideal world, our homes and cars would never face any kind of damage or loss—but unfortunately, that’s not the case in the real world. The good news is: your insurance policy is there to ensure you’re protected when the unexpected strikes.
Every insurance claim you make will likely have some sort of impact on your insurance, but it’s hard to determine its exact effect. Each insurer has a different method of assessing risk levels, and there is no definitive rulebook on what a good or bad claims history looks like. However, a general rule of thumb is that the fewer claims you have on your history, the lower your risk profile—which typically results in lower insurance premiums. If you’ve been claims-free for a certain amount of years, you could be eligible for an additional discount!
2. Not all claims are created equally.
Although having fewer claims is generally considered more insurable, that doesn’t mean you should avoid making claims at all costs! When calculating insurance premiums, insurance companies will consider the nature and costliness of claims filed, so not all of them will have the same impact. For Auto Insurance claims, your personal driving record, as well as who was at fault for the collision, will also be taken into account.
Paying for minor repairs out of pocket to avoid filing small claims might seem a good idea, but don’t shy away from enlisting your insurer’s help for the bigger issues. For example, if your backyard fence has a hole in it, you’d likely be better off fixing it up yourself. But if a fallen tree damages the roof of your car, that’s when you should be filing a claim. In general, keep in mind: all car accidents should always be reported to your insurance company, no matter who’s involved or how much damaged is incurred, since it may affect the risk level of your vehicle afterwards.
If you’re not sure about the specific terms of your coverage, it won’t hurt to just ask, especially for accident claims. Your broker can provide you with the information and advice you need to make informed decisions. And since Auto Insurance is mandated across Canada and more government-regulated, it’s worth noting that auto insurers tend to be more lenient than home insurers when offering coverage to those with a history of claims.
3. Claims won’t impact you forever.
Whether you’re renewing your current policy or moving to a new insurance company, how recently you’ve made a claim can also impact your premium. The more recent a claim on your record is, the more it’ll affect your insurance. And if you manage to stay claims-free going forward, you might start to see your rates drop as the length of time since your last claim increases!
While past claims won’t necessarily disappear from your record itself, insurance companies will typically only look at your most recent history. The key question is, how far back will your insurance company go when it comes to deciding whether or not to approve your application and determining your rates? That depends on your insurer, and could range anywhere from three to ten years. If you’re ever unsure about the specific requirements of your insurance provider, check with your broker to confirm.
How can I save money on my Home and Auto Insurance—even with a claims history?
1. Be selective.
Being selective with the types of claims you file can go a long way in terms of keeping your claims history clear and your premiums low. If you want to be even more proactive and get ahead of potential future claims, consider adding accident forgiveness to your auto policy or claims forgiveness to your Home Insurance. With this coverage add-on in place, your next claim will essentially be “forgiven” by the insurance company, and won’t impact your rates.
2. Shop around.
Insurance companies all have different views of risk based on a variety of factors, including the details of your past claims. And depending on the market as well as your personal circumstances, the insurance company that offered you the best rates last year might not be the greatest option for you this year. That’s why the best way to make sure you’re getting the most bang for your buck is to shop around, do your research, and compare your options!
3. Work with a broker.
We know that the idea of filing a claim can be stressful, especially if you’re worried about its impact on your insurance costs. It helps to have someone in your corner—and that’s where the value of a trusted broker comes in.
Brokers are seasoned experts on insurance policies and claims procedures. They can help you assess your risks, determine the potential impact of a claim, and decide whether to proceed or explore other options. Once your claim is filed, they’ll support you through every step of the process and help you understand your rights, responsibilities, and what to do next. And if you partner with a broker like PROLINK, you’ll also have a claims advocate by your side.
As an independent insurance brokerage, PROLINK isn’t tied to one specific insurance company. That means we’ll always advocate for your best interests, not the insurer’s. We’ll make sure your claim is resolved fairly and efficiently and ensure you’re getting the most of what your plan has to offer.
Need help finding the right Home & Auto policy? PROLINK is here to help. In addition to claims handling and advocacy, we’ll also keep an eye on your costs. If the price isn’t quite right, we’ll survey the market and compare quotes on your behalf to find the best-fit coverage for your home and car.
With over 40 years of experience and access to a wide network of over 30 insurers, you can rest assured that we’ll have your back in case you ever need to file a claim. To learn more, connect with PROLINK today!
PROLINK’s blog posts are general in nature. They do not take into account your personal objectives or financial situation and are not a substitute for professional advice. The specific terms of your policy will always apply. We bear no responsibility for the accuracy, legality, or timeliness of any external content.