How much will my home insurance increase after a claim?

Whether your home’s never been damaged or you’re a first-time homeowner, filing an insurance claim can be a daunting experience—especially since you’ll likely experience a premium increase. But, how much of an increase can you expect? Stick around to find out:

What is the average increase in home insurance after submitting a claim?

When filing a claim with your insurance company, you can expect your home insurance premiums to increase the following year. So, how much will your home insurance rates increase? There are many factors that go into determining your risk profile as a customer. So, while it is difficult to determine what your home insurance rates will be, we can provide you with a list of factors an insurance company will look at:

Your home insurance company

First, it's important to note that your insurance company will have its own standards and process when it comes to determining your risk profile. Therefore, depending on which insurance provider you're with, how much your home insurance premiums increase the following year may partly be due to you choosing to purchase your coverage from them and not another provider.

Your previous home insurance claims

Another imperative factor an insurance company is going to look at is your entire claims history. Within this, they're going to pay close attention to how many claims you've filed in the past, and what your home insurance claims were for. Ultimately, too many claims listed in your claims history will serve as a red flag to future insurance companies, deeming you a higher risk to insure in the future.

Local regulations

Next, there may be local regulations that protect you from experiencing claim-related rate increases from your home insurance company. However, whether or not these laws are enacted where you reside will depend on which province or territory you live in. For further clarification, you may want to take a look at your local laws or speak directly to your insurance provider for more information.

The type of insurance claim

Lastly, the types of claims filed can also play a role in how much of a rate increase you experience the next time you renew your home insurance coverage. This is because some claims may be viewed differently from others. For example, personal liability claims versus a water damage claim.

Whether it's your first claim or not

Depending on your insurance provider and whether it's your first claim filed under your home insurance plan, some insurers offer what is known as claim forgiveness. Claim forgiveness means your provider will waive your premium increase following your first claim. This means that you won't have to worry about paying more money for coverage the next year unless you file a second claim with them.

Claim forgiveness is great for first-time homeowners who are new to having coverage and owning a property. It's also nice to have if you're a long-time customer who hasn't filed previously, either. To determine whether your provider offers this, take a peek at your policy, as it may be listed there. Otherwise, you can contact your insurance directly and speak to an agent for more information.

Premium increase by claim type

Not all home insurance claims affect your premium the same way. While some claims—like water damage or liability—can lead to significant rate hikes, others may have a milder impact or even be forgiven altogether, depending on your insurer. Understanding how different types of claims influence your renewal cost can help you make smarter decisions about whether to file and what to expect if you do. Here’s a breakdown of typical premium increases by claim type:

How long do insurance claims influence your home insurance premiums?

So, how long can you expect a single claim to lead to a premium increase? Don't worry--a single claim isn't going to ruin your claims history forever. While the length of the impact can vary between providers, you can expect a claim to be listed for about five to seven years before it will be erased from your record.

How much does home insurance cost?

The average home insurance cost for Canadians can vary between $ 1,000 and $ 2,000 annually. That said, there are numerous factors that an insurance company will consider when calculating your risk profile, which ultimately determines how much you'll pay for coverage. This includes things like:

Where you live

Zip codes matter for a couple of reasons. Living near a body of water or wooded area that's far from a fire hydrant and other emergency resources, you'll likely pay more for coverage, as the likelihood of your home being damaged as a result of wildfires, flooding, and other perils is higher than for someone living elsewhere.

The current condition of your home

The age and current condition of your home can also play a role in your premium. Living in an older home could lead to more claims in the future, which can influence your costs. Newer homes that are well-maintained may yield lower premiums.

The value of your belongings

The more expensive your items are, the more coverage you'll require, which will cost more.

Your deductible amount

The lower your deductible, which is the amount you pay when you file a new claim before your insurance pays for the remaining costs, the higher your premium. Increasing your deductible can lower your costs slightly. But you'll take on more financial responsibility when filing a claim in the future.

Your claims history

You'll pay more for your premium if you have a claims history with too many claims listed on your record. The more claims you have, the greater the risk you pose to insurers, which translates into higher costs.

Making a home insurance claim can raise your premiums—sometimes significantly. Don’t go it alone! BrokerLink insurance can help you find the right coverage and discounts to keep your costs down, even after a claim. Contact BrokerLink today to protect your home and your budget!

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How to prevent home insurance claims

To prevent home insurance claims, there are numerous measures homeowners can take, including the following:

Instal a backwater valve and sump pump

If you live in an older home with a basement, you can prevent flooding and water claims by installing a backwater valve and sump pump. These plumbing devices prevent the backflow of water and sewage from entering your home following periods of heavy rainfall and snow melt, which can cause municipal sewage systems to become overwhelmed.

Ensure your gutters are clean

Before the fall and winter seasons, make sure that you clean your gutters and downspouts. Remove any leaves, sticks, and other debris to ensure water can drain properly away from your home. Doing so will prevent flooding and home insurance winter claims.

Book maintenance on your HVAC system once a year

As temperatures drop, the likelihood of your plumbing system freezing increases. When this happens, your pipes can burst, leading to flooding and other water damage in your home, especially during the winter. To ensure you are able to properly heat your home during the colder months of the year, book a yearly HVAC maintenance appointment.

Ensure your plumbing system is sound

Leaks, backups, and other plumbing problems can cause water-related damage to your home and personal belongings. To prevent this, booking an annual maintenance appointment for your plumbing is recommended.

Consider a tankless water heater

Water heaters, especially older ones, are notorious for leaking water. If you have the means to do so, switching to a tankless water heater can give you peace of mind knowing that you won't experience leaks from your appliances.

Shut off your main water valve when you leave

If you're leaving for vacation, shut off the main water valve to your plumbing to prevent flooding while you're away.

Instal security cameras and alarm systems

Lastly, consider updating your home's security system with cameras, alarm systems, and motion lights to deter unwanted visitors.

Is it worth filing a claim?

Before filing a claim under your home insurance, there are a couple of questions to ask before contacting your insurance provider.

Is the damage to my home more than the cost of my deductible?

One of the most important questions to ask yourself is whether the damage to your home is more or less than your deductible. If you believe the damage is more than your deductible, then filing a claim with your insurer is worth it. However, if the damage is less than your deductible, it makes sense to hold off on filing in order to save money.

Can I afford to cover the damages out of pocket?

While it makes sense to file a claim for major damages or renovations that need to be done to your home, if the damage is minimal and you can afford to pay for the repairs out of your own pocket, you may want to consider doing so, as the premium increase may be more than the cost of repairs.

If you're unsure whether filing a claim is worth it or not, we recommend speaking to your insurance provider or a broker, who can analyze your coverage and premiums before providing advice for your specific scenario.

What is home insurance?

Home insurance, also referred to as homeowners insurance, is a type of coverage specifically designed to protect your finances and interests as a homeowner in Canada. Although homeowners insurance may vary between different home insurance providers across the country, generally speaking, a standard policy will include the following plans:

Dwelling coverage

Dwelling coverage is designed to protect the physical structure of your home and other structures on your property from various perils listed in your policy. Common covered perils include:

• Fire and smoke damage
• Theft and vandalism
• Weather damage, including hail and high winds
• Car/aircraft impact
• Explosion
• Falling objects due to extreme weather

Personal property insurance

Personal property insurance, sometimes referred to as personal belongings insurance or contents coverage, extends protection to all of the items stored in your home from various perils that may cause damage or theft, up to your policy limits.

It's important to note that when you first purchase your home insurance policy from an insurance provider, they will ask you to generate a home inventory. This inventory will be a list of all personal belongings and how much these items cost. With this total in mind, your home insurance company will determine how much coverage you require.

Keep in mind that if you own high-value personal belongings such as artwork, jewellery, or musical instruments, a standard home insurance policy may not provide enough coverage to sufficiently compensate you should you need to file an insurance claim. Instead, you may be prompted to purchase high-value home insurance.

Liability insurance

Liability insurance is another policy included in standard homeowners insurance coverage. This portion of your coverage will protect you in the event someone is injured on your property or property damage is caused.

For example, if someone slips and falls on your property and they suffer injuries while breaking their phone, they have the legal right to sue you for damages. Should liability claims be brought against you, this portion of your coverage will pay for medical bills, funeral costs, repairs, replacements, legal fees, and other expenses associated with the settlement of your insurance claim up to your policy limits.

Additional living expenses

Additional living expenses are the final portion of a standard home insurance plan. In the event your home is damaged by a covered peril listed in your policy, additional living expenses coverage will pay for your accommodations, meals, and other additional expenses you incur during the time you are unable to reside at your home.

Optional home insurance

Like auto insurance, homeowners in Canada have the option of adding additional homeowners insurance policies to their plans as additional measures and added peace of mind. Some common ones include:

Overland water damage

If you live in an area of Canada that's close to a natural body of water or the mountains, you may want to consider overland water damage coverage. This policy will cover the cost of repairs or replacement your home requires if a natural body of water near your home floods and causes damage to your property.

Sewer backup insurance

Sewer backup coverage is another optional policy to consider, especially if you live in an older home or have a basement. Sewer backup due to heavy rainfall and overwhelmed city sewers can cause backflow into your home. When this occurs, not only can the damage be significant, but it can also cause health concerns for you and your family. With sewer backup insurance, any damages to your home and personal belongings will be covered up to your policy limits.

Identity theft insurance coverage

Lastly, there's identity theft insurance. In the event that your home is broken into and your important documents that contain your personal information, such as your social security number, banking information, or birth certificate, are stolen, this insurance policy will pay for the costs associated with repurchasing your documents and any forthcoming investigations.

What does home insurance not cover?

While home insurance offers protection against numerous perils, some instances will not be covered by your insurance provider. For example, your insurance provider will not cover appliances in your home that are damaged as a result of age or a lack of maintenance, as maintaining your home and the appliances in your home is your responsibility as a homeowner.

Your insurance provider will also not cover mould damage to your home or personal belongings. An exception to this would be if you had overland water damage insurance, and flooding occurred in your home, leading to mould.

Lastly, pest control insurance claims are also likely to be denied as pest infestations again are a type of home maintenance issue that is the responsibility of the homeowner. Should you need clarification on what is and isn't covered, read your policy for further information. If you're still having difficulties, don't hesitate to reach out to your insurance company for assistance.

Can you invalidate your home insurance?

Yes, invalidating home insurance when filing a claim is entirely possible and happens more often than you think. So, how does this happen, and what can you do to avoid your claim being denied? Here's everything you need to know:

Starting a business outside of your home

While it is legal to start a business inside your home, it's important to mention that should a loss or damage occur due to your business operations, your insurance claim will not be covered. You'll need to purchase a separate insurance policy for your at-home business on top of your homeowners coverage.

Lying about the value of your belongings

As we said, the value of your personal belongings is used to determine how much coverage you require. However, exaggerating the value of your items could lead to a claim denial if your insurance company believes you are intentionally lying to them. Ensure you accurately estimate the value of your personal belongings to prevent this.

Conducting criminal activities in your home

Conducting illegal activities in your home that cause damage or losses will also lead to a claim denial. This includes growing and distributing illegal substances, intentionally causing harm to others, and possessing illegal firearms, substances, and other items.

Renovating your home

Renovating your home is not illegal. However, when you make changes to your property that increase the value of your home and fail to inform your insurance company, you may not have enough coverage to cover the damages or losses that may occur in the future. So, when filing a claim in the future, you could be stuck with the bill if you do not notify your provider beforehand of any improvements or betterments to your home.

Posting a photo you're on vacation

Yup, that's right. If you post a photo of you and your loved ones on vacation, you could notify others that your home is vacant, making you an open target for theft and vandalism. Because it's your responsibility as a homeowner to take due care of your property, taking a photo and posting it online technically violates this section of your terms and conditions. To prevent this, post photos of your vacation once you're back home.

Failing to conduct regular maintenance

As mentioned, it's your responsibility to take care of your home and the surrounding property. Failing to do so could lead to damages and losses that won't be covered by your insurance if it's determined that the losses or damages were a result of your neglect.

Is homeowners insurance mandatory?

No, unlike other types of insurance coverage in Canada, it is not mandatory to purchase homeowners insurance. While this may be a requirement of your mortgage company, in the event that you do not have a mortgage , owning a home is still a massive investment. And, without the right measures in place, you could put your finances and interests at risk if you need to file a claim or a lawsuit is filed against you.

To ensure you're adequately protected against the unexpected, purchasing a customized home insurance plan is the right move for peace of mind all year round.

How can I get a lower home insurance rate?

To get a lower home insurance rate the next time you renew with your current or a different insurance company, there are a couple of steps you can take to potentially lower your annual premium, even after filing a claim:

Pay your insurance premiums upfront

Your insurance company will charge a monthly fee on top of your premium when you pay monthly, as it costs them money to process each payment. To avoid these administrative fees, consider paying your insurance premiums upfront.

Increase your deductible

Choosing a higher deductible means you'll be responsible for paying more when filing future claims. As a result, your insurance company will lower your premium.

Bundle your home and auto insurance

Have auto insurance with the same provider? Consider bundling your policies to lower your premium increase potentially. Here's what you can do:

• Ask about discounts:

Ask whether there are any discounts available for further potential savings.

How BrokerLink can help

At BrokerLink, we help Canadians purchase affordable home insurance. With access to numerous insurance policies from some of Canada's top providers, our brokers can help you compare coverage options, qualify for discounts, and answer any questions about your current insurance policy or any homeowners insurance claims you may have. Beyond standard home insurance, BrokerLink can also help you acquire the following:

• Condo insurance
• Vacation property insurance
• Tenant and renters insurance

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