Can You Get Home Insurance If You Have a History of Claims?
If you’ve filed multiple home insurance claims in the past, you may be wondering whether it’s still possible to secure coverage. The short answer is yes , you can still get home insurance—but it might come with some challenges. Insurers view a history of claims as an indicator of higher risk, which can affect your eligibility, premiums, or policy terms. However, there are strategies you can use to navigate this situation and find affordable coverage.
In this article, we’ll explore how a claims history impacts your ability to obtain home insurance, what insurers look for, and actionable steps to secure a policy despite your past claims.
Why Does Your Claims History Matter?
Home insurance companies assess risk when determining whether to offer you a policy and at what price. A history of claims signals to insurers that your property may be more likely to incur future losses, which increases their financial exposure. Here’s why claims history matters:
- Frequency of Claims: Filing multiple claims within a short period (e.g., two or more in three years) raises red flags for insurers.
- Type of Claims: Certain types of claims, such as water damage, fire, or liability lawsuits, are considered high-risk and may weigh more heavily against you.
- Severity of Claims: Large payouts for significant damages suggest greater potential costs for the insurer in the future.
- Fraud Concerns: Excessive or suspicious claims could lead insurers to question the legitimacy of your applications.
Insurers typically review your Comprehensive Loss Underwriting Exchange (CLUE) report, which contains details about claims made on your property over the past seven years. This report plays a key role in their decision-making process.
How a Claims History Affects Your Home Insurance
Having a history of claims doesn’t automatically disqualify you from obtaining home insurance, but it can impact several aspects of your policy:
1. Higher Premiums
- Insurers may charge higher premiums to offset the perceived increased risk associated with your claims history.
- For example, if you’ve filed multiple water damage claims, your premium for water-related coverage could skyrocket.
2. Limited Coverage Options
- Some insurers may exclude specific perils (e.g., flooding, sewer backup) from your policy if you’ve previously claimed for those issues.
- Others might refuse to insure certain high-risk features of your home, such as an older roof or plumbing system.
3. Difficulty Finding Standard Policies
- Mainstream insurers may decline to offer you coverage if your claims history is extensive or involves high-risk events.
- In such cases, you may need to turn to specialized providers or high-risk insurance markets.
4. Policy Cancellations or Non-Renewals
- If you’ve had frequent claims while under an existing policy, your current insurer might choose not to renew your coverage.
Despite these challenges, there are ways to overcome them and secure the protection you need.
Steps to Secure Home Insurance with a Claims History
If you’re concerned about your claims history affecting your ability to get home insurance, here are practical steps you can take:
1. Shop Around and Compare Quotes
- Not all insurers treat claims histories the same way. While some may penalize you heavily, others may be more lenient.
- Use online comparison tools or work with an independent insurance broker who can help you find policies tailored to your situation.
2. Be Honest About Your Claims History
- Always disclose your claims history truthfully when applying for insurance. Misrepresenting information can lead to denied claims or policy cancellations later.
- Providing context for your claims (e.g., explaining that they were due to a one-time natural disaster rather than recurring negligence) may help reassure insurers.
3. Improve Your Home’s Risk Profile
- Take proactive measures to reduce the likelihood of future claims. Examples include:
- Installing smoke detectors, carbon monoxide alarms, and security systems.
- Upgrading old wiring, roofs, or plumbing to prevent fires or leaks.
- Implementing flood prevention measures, such as sump pumps or backwater valves.
- These improvements demonstrate responsibility and lower your risk profile, potentially making you more attractive to insurers.
4. Consider a Higher Deductible
- Opting for a higher deductible reduces the insurer’s financial burden and can make them more willing to offer you coverage.
- Just ensure you have enough savings to cover the deductible in case of a claim.
5. Look into High-Risk Insurance Providers
- If traditional insurers deny you coverage, consider working with companies that specialize in high-risk clients. These providers cater to individuals with challenging claims histories but often charge higher premiums.
- Examples of high-risk insurers include FAIR Plans (in the U.S.) or similar programs in Canada, though availability varies by region.
6. Bundle Your Policies
- Bundling home insurance with other types of coverage, such as auto or life insurance, can sometimes help you qualify for discounts or favorable terms, even with a claims history.
7. Seek Assistance Through Government Programs
- In some regions, government-backed insurance programs exist to assist homeowners who cannot obtain private coverage. For instance:
- In Canada, provincial Fair Insurance Plans may provide options for high-risk properties.
- In the U.S., state-run FAIR Plans offer basic coverage for homeowners unable to secure private policies.
8. Work on Rebuilding Your Record
- Claims typically remain on your CLUE report for seven years. After that period, they no longer influence insurer decisions.
- During this time, maintain a clean record by avoiding unnecessary claims. For minor repairs or damages, consider paying out-of-pocket instead of filing a claim.
9. Consult an Insurance Broker
- Independent brokers have access to a wide range of insurers and can advocate on your behalf to find suitable coverage.
- They can also guide you through the application process and help present your case in the best light.
What to Do If You’re Denied Coverage
If you’re unable to secure home insurance through standard channels, don’t panic. Here are alternative options:
- Appeal the Decision: Contact the insurer and ask for a detailed explanation of why your application was denied. Sometimes, providing additional documentation or clarification can reverse the decision.
- Explore Specialty Markets: As mentioned earlier, high-risk insurers or government programs may still offer coverage.
- Renters Insurance as a Temporary Solution: If selling your home isn’t an option, renting it out temporarily and purchasing renters insurance for your personal belongings might be a stopgap measure.
- Legal Advice: If you believe you’ve been unfairly denied coverage, consult a lawyer specializing in insurance law to explore your rights.
Tips to Avoid Future Claim-Related Issues
Once you’ve secured home insurance, take steps to minimize the chances of needing to file claims in the future:
- Perform Regular Maintenance: Address small problems before they escalate into major issues.
- Document Everything: Keep records of home improvements, inspections, and communications with your insurer.
- Understand Your Policy: Know exactly what’s covered and what’s excluded to avoid surprises during a claim.
- Use Discretion When Filing Claims: Only file claims for significant losses; for minor damages, consider self-insuring to preserve your claims-free status.
