Claims History

What is an insurance claim?

Claims history is the record of a person’s use of insurance. When you experience a loss and make a claim, the details of that claim become part of your claims history. The subject of the claim, what caused the damage, the amount paid by the insurer, and other such details are all included in this history.

Insurance providers use your claims history as one factor in deciding what your insurance premiums will be. Generally, they’re only concerned with the previous 3-6 years. Recent claims are more important than old claims.

Your claims history is something like credit history, but it records your insurance usage instead of your financial habits.

How can claims history affect my coverage?

Claims history is only one of many factors insurance companies look at when they’re determining your coverage and your premiums, but it’s an important one. An insurance history full of claims isn’t desirable to an insurance underwriter. Statistically, a history of previous claims correlates with a greater likelihood of future claims; that means higher premiums. In particularly severe cases, they might not be able to offer insurance at all.

As to how much premiums will increase, that varies from case to case and insurer to insurer. Some types of claims are worse than others. For example, water damage claims often lead to larger home insurance premium increases, since water damage frequently leads to expensive repair issues, like mould. The recency of claims is also a factor: a claim from six months ago is more significant than a claim from five or six years ago.

On the flip side, a squeaky-clean claims history is exactly what underwriters want to see. If you’re claims-free, it tells the underwriter that you’re capable of preventing avoidable losses. If your home insurance history is from the same property, it shows that your home is in good shape and that you’re maintaining it well. Most insurers offer a discount for claims-free histories.

Here’s something important to note:

Tenant insurance still counts towards claims-free status for homeowner’s insurance. If you’ve had tenant insurance claims-free for ten years, then you finally get to buy a house, you’ll probably find lower home insurance premiums than someone who never bothered with tenant insurance.

What is a claims history letter?

A claims history letter (a.k.a. claims history report or experience letter) is an official document from your insurer that describes your claims history. This letter states what was insured, who the named insureds were, and what claims were made (if any). It also includes the reason that the policy ended, whether it was cancelled by the insurer or the insured.

Claims history letters aren’t usually necessary when moving to a new insurer, since they’re able to access your claims history digitally using databases like the Habitational Insurance Tracking System (HITS). If you’re moving to a new country, however, a claims history letter helps a lot. Insurers in other countries likely can’t access your Canadian claims history themselves.

If you need a claims history letter, it’s as simple as asking your insurer. They’ll be happy to provide you with one.

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