How long does a home insurance claim increase your premium for?

This article has been updated from a previous version. 

If you’ve ever had to file a home insurance claim, you might wonder what happens next, especially when it comes to your premium. Claims are meant to protect you during unexpected events, but they can also lead to higher costs down the road.

So, how long does a home insurance claim affect your premium in Canada?

In most cases, a claim can increase your rate for five to seven years, depending on your insurer and the type of claim. While this adjustment is common, it’s not permanent and with the right steps, you can return to a more affordable rate over time.

Why do home insurance claims increase rates?

Home insurance premiums are calculated based on risk. When you file a claim, insurers see it as an indicator that you may file more in the future. To offset this perceived risk, they raise your premium.

The size of the increase often depends on the type of claim. For example, water damage claims typically lead to higher adjustments than minor theft because they signal ongoing issues and higher repair costs. Insurers use this data to predict potential losses and price coverage accordingly.

In some cases, insurers also consider the property’s claims history, not just yours. If your home has had multiple claims, even before you owned it, that can influence your rate, as well. This approach helps insurers assess both the homeowner and the property for future risk.

Read more: When to file and not file a home insurance claim

How much can your home insurance premium increase?

The amount by which your home insurance premium may increase after a claim has to do with the type of property you own and the policy you hold. This is because the cost of servicing a claim can vary from one home to another.

"A small water claim on a property policy that is $700 yearly may increase the cost a small amount,” says Matthew Johnson, a personal lines unit manager at Intact.

“However, a small water claim on a $2,500 yearly policy on a home that is located closer to a river or at a lower elevation may increase the cost more since there is a higher risk of the claim occurring again and at a higher cost likely associated with that property,” he adds.

Some insurers offer first-claim forgiveness, meaning your first claim won’t raise your premium. However, the forgiven claim still follows you to your next provider and may affect your rate, similar to accident forgiveness in auto insurance.

Read next: One home insurance claim could up your premium by 20%, says Rates.ca report

Home insurance companies rate the policyholder and the property

Some insurance providers don’t just look at the claims filed by you; they look at the entire claims history for your home. Meaning, even claims made at the insured property prior to your inhabitance can inform your current rate.

“The reason for this is because we want to accurately rate for the risk of both the person we are insuring and the property we are insuring,” says Johnson.

This is not necessarily the case at all insurance companies, as claims are rated differently when determining the premium within a given policy. 

However, in general, “having many claims at the property or on your own personal home insurance record may result in an increased premium, higher deductible, or denial of coverage from certain insurance companies,” says Johnson.

Learn more: How raising your deductibles can help you save on home insurance

Preventing future home insurance claims

If you do make a home insurance claim, chances are your provider will want to eliminate the risk of the claim occurring again. And if you’d like to continue your coverage with them, they may require you to take actionable measures to prevent it. This could involve adding a new fixture to your home.

“For example, if there is a water claim for flooding in the basement, the cause would be determined, and the risk would be mitigated by adding something like a sump pump,” says Johnson. That way, water in the basement can be easily pumped outside and away from the home, preventing future water damage.

Ideally, taking additional measures to prevent claims of any kind can help you avoid them in the first place and maintain a lower home insurance rate.

Read next: One home insurance claim could up your premium by 20%, says Rates.ca report