Buying a home is the dream, but actually having a home is an expensive business. Every month we dutifully pay for home insurance so when a disaster happens, we can claim and replace household items. Unfortunately, claiming from your insurance just once will have an effect on any future claims, no matter the reason for your claim. That’s right, your claims history can make you a greater risk for future claims, which results in higher premiums. This is frustrating for homeowners who are penalised twice through no fault of their own.
That’s not to say you should be afraid of claiming; after all, that’s why we have insurance in the first place. Bear these following points in mind and save yourself a nasty surprise the next time you renew your policies.
Size doesn’t matter
Firstly, the size of the claim is not an issue. Bigger claims are not necessarily more expensive for insurers than smaller claims, as most of the costs are admin-related. All claims bear the same admin costs regardless of the amount claimed.
Your insurance premiums are based on your claims history. So if have claimed before you are considered more likely to claim than someone who hasn’t ever claimed.
You’re not bound for life
Your claims history is only one part of your risk profile. Your insurance score is based on a number of things, including your claims history, credit scores and driving record. Insurers calculate your insurance using these and other factors. The calculations differ from company to company. This is why it pays to compare insurance premiums, so you can find one that best suits your needs and claims history.
Even though you have to declare past claims, it’s worthwhile comparing insurance quotes against the anticipated premium increase. Traditional thinking says that staying with one insurer will lead to loyalty benefits, but the contrary is true. Insurers are more likely to offer better deals to attract new customers rather than focus on existing customers.
However, there’s no reason you can’t be a new customer more than once! If you find that an opening offer beats the renewal price, don’t be afraid to sever ties and move on.
Honesty is the best policy
It is crucial that you are honest, open and upfront about your claims history. If you are found to have misled or omitted any important information, your insurance policy could be invalidated and you will effectively not be insured. What’s more, you may only find out about this at a time when you really need it, so rather don’t take any chances.
One way you can balance honesty and the hard reality of your claims history is by taking preventative measures. If, for example, your residential area is prone to floods and your previous claim was as a result flood damage, be sure to keep an eye on communications and alerts from your local council regarding impending weather conditions. Or, if your previous claim related to a burglary, update your security system to deal with the weakness that led to the break-in. Such proactive measures will go a long way with your insurers and their considerations of your premiums.
In a nutshell, we have insurance for a reason so if you need to, claim from it. So, as long as your claims are legitimate and you don’t claim every other week, you shouldn’t be afraid of claiming. Bear in mind, though, that this will impact your future insurance premiums.