A single home insurance claim can drive up insurance costs by more than 50%, according to a new study by consumer group Which?
Customers who have made one claim on their home insurance pay an average of 57% – or £91 – more than those who have made no claims.
After two recent home insurance claims, the average premium shot up from £161 for a customer with no claims to £359 – a 123% increase, according to Which? and comparison site GoCompare.
The higher prices for home insurance claimants may be due to the nature of their claims. Which? said.
Nearly a third (30%) of home claims related to accidental loss or damage at home, a quarter (25%) related to water escaping and 9% related to theft from the home.
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These claims can all call for complex or expensive replacements or potential concerns about the safety of the claimant’s home.
By comparison, motorists with two recent car insurance claims paid only 8% – or £69 – more on average than those who had made no claims.
The study analyzed the averages of millions of quotes received by motorists and households using the GoCompare comparison service between January and August 2021.
Perhaps unsurprisingly, consumers who had made multiple claims were cited more on average and the premium increased as more claims were made.
However, claiming home insurance seemed to have a greater impact on prices than claiming car insurance.
Road users who made four claims on their car insurance paid an average of £469 more, an increase of 53%. This was still a smaller cost increase than the 57% increase for single claim home insurance customers.
Among car insurance customers, drivers who had made one claim actually paid £81 less than those who had not previously claimed – a 9% drop in prices.
This could be due to drivers taking the time to look for better deals to avoid paying more.
That? advised customers that “honesty is the best policy” whether or not you decide to file a claim. “If an insurer discovers that you have not disclosed a fact, especially while filling out a form asking you for your history, it may at worst consider this ‘non-disclosure’ and use it as a basis for making a dismiss a claim or cancel a policy,” said Welke?
Jenny Ross, editor of Which? money, said: “The data shows that making claims can significantly affect the price of your insurance, especially for your home. If you’re not happy with your increased premium, be sure to shop around as other insurers may be willing to cover you for less.
“You might decide it’s not worth making a claim at all, but insurers may ask you to disclose incidents that could have led to a claim. Honesty is always the best policy, otherwise your insurance could be voided.”
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Ryan Fulthorpe, auto and home expert at GoCompare, said: “If you make a claim on auto and home insurance, your premiums will almost certainly increase over the next year. And if we look at the data, it turns out that the more claims you make, the more it affects the price you pay.
“A number of motorists will have a claim on their insurance and as our statistics show this should not affect the price you pay if you have one claim on your policy. Insurance companies will treat claims differently, so shopping around may not put you out of pocket.
“However, if you add two claims to the mix, the overall impact is significant.
Insurers will treat those who have more than one claim differently because they take into account the propensity to claim, so the more claims you have, the more likely you are to make more.’