Will a water damage claim raise my premium?

Every page you will find on this question gives you a percentage. None of them says where it came from.

We are not going to give you one, because there is no published Australian dataset of premium movements after a home water claim, and inventing a number for a page like this is exactly how the rest of this market ended up worth nothing. What follows is what is actually knowable.

What is actually true

Claims history is used, and it attaches to the address as well as to you

Australian home insurance applications ask about claims in a recent period, commonly the last five years, and they ask about claims at the property as well as claims by the applicant. That second part surprises people who have just bought a house. It is also why a declined claim is not automatically neutral: it happened, and the question is usually phrased about claims made rather than claims paid.

The effect is not uniform

Insurers price differently from one another and they weight different things. One claim moves one insurer’s renewal and not another’s. This is the entire basis on which the comparison market operates, and it means “a claim costs you X%” is not a coherent sentence even before you ask where X came from.

Non-renewal is a separate risk from repricing

Renewal is an offer of a new contract. An insurer that no longer wants the risk does not have to make one. In flood-exposed parts of Australia this is a live issue independent of any individual claim, and it is the risk worth thinking about before a second claim rather than a first.

Not claiming has costs too

Paying privately for a large drying job so the claims history stays clean is a decision with a number attached, and the number is usually larger than people expect. Price it before you decide. And bear in mind that undried water produces mould, and mould produces a claim you cannot avoid later — NSW Health, Mould factsheet makes the point that it returns unless the cause is fixed.

Do the arithmetic instead

The decision is not really about premiums, because the premium effect is unknowable in advance. It is about whether the claim is big enough to be worth the excess and the entry on your history. That is arithmetic, and this site publishes the inputs.

What to do at renewal, which is where this actually bites

If a claim is going to affect anything, it affects the renewal notice rather than the current policy. Three things are worth doing when it arrives, and all three are free.

1. Read the schedule, not the total. Insurers move excesses, sub-limits and flood positions at renewal, and a premium that looks unchanged can be sitting on a materially different product. The numbers to check are your excess, your flood excess if there is one, and your mould sub-limit — those three decide what a water claim actually costs you.
2. Answer the claims-history question accurately. It usually asks about claims made over a recent period, at the property as well as by you. A non-disclosure is a far worse problem than a claim, because it goes to the contract rather than to the price.
3. Shop it, and shop it on the schedule. Insurers weight claims history differently from one another, which is precisely why no single percentage could describe the effect. A quote that is cheaper because it carries a $5,000 flood excess is not cheaper.

And the one to think about before a second claim rather than a first: renewal is an offer of a new contract, and an insurer that no longer wants the risk is not obliged to make one. In flood-exposed parts of Australia that is a live issue independent of anything you personally did.

What you are entitled to see

If a claim is declined or cut back, two Code paragraphs give you the file, and hardly anybody uses them.

Ask for the reports. In a water claim the decisive document is usually a hydrologist’s report, a plumber’s report or a loss adjuster’s scope, and it is common for it to contain an assumption you can correct — a wrong start time, a wrong water source, a missed second event. You cannot correct what you have not read.

Then, if it still does not resolve: AFCA, how we resolve complaints. It is free to the consumer, it is the scheme the Code obliges general insurers to belong to, and its determinations bind the insurer.

Common questions