Home Insurance Premium

Does the insurance premium increase based on past claims of the property or based on past claims of the property owners?

If the previous owner made lots of claims against the property, do I end up paying higher premium?

 

Because when you take out a new insurance policy you are usually asked about past claims.

 

Correct. This isnt a question just for no claim bonuses. It assessed as a element of claim risk. It relates to the claims experience of the proposed insured parties not a former owner.
NRMA like others are vague and say Your premium is based on the likelihood of a claim being made under your policy for an incident that occurs during the policy period

They have a detailed guide which is also vague since the mathematics is performed by actuaries. We collect information in relation to these pricing factors from you and other sources and we use our data, models, and experience to assess how important each pricing factor is for your policy. At any time we may change the relative importance of any of the pricing factors or how they combine to affect your premium, and we may add to or remove pricing factors from the calculation as we see fit.

https://www.nrma.com.au/sites/nrma/files/nrma/documents/nrma_home_ped_nsw_qld_act_tas_1021.pdf

No claim bonuses also ratchet down in mnay cases as well as premiums rising
If you have achieved Claim Free Privilege Plus status, you are awarded with free No Claim Bonus Protection. This means you will retain you Claim Free Privilege Plus status and 25% No Claim Bonus when you make one claim from inception of your policy (for a new policy) or the date of your last renewal notice*. However, if you make two claims you will move down to our 20% No Claim Bonus and will continue to move down a level for each additional claim.

 

As far as I know, you have to declare past claims you have made.

You would have no way of knowing the claims history of the vendor, and doubt that you would be asked.

 

Does that mean the likelihood of claims depends solely on the new owner? This doesn't make sense to me. I thought it should depend on the property itself.

 

So how would you know the claims history of a property you are buying?

Clearly the flood risk is easily discovered.

 

I wouldn't know but insurer should. It should base on the area and past claims for neighbouring properties.

Claims are out of control of the owner, aren't they? I don't understand why my past claims with other properties have anything to do with the new one.

 

Past performance does not guarantee future results but it can be a fairly good indicator.
If you have had 3 x vehicle incidents and then you change cars would you expect the clock to be set back to zero?

 

Looking at the top reasons for home insurance claims, most are beyond the control of the owner and more correlated to the weather, environment...

Car claim is different as we are on the driver's seat.

AAMI's top home insurance claims in Australia - Are you covered?

StormWater LeakageHail DamageAccidental DamageWindstormTheftOtherMotor Burn OutGlassFire

 

Insurer may already know of past claims if they were the insurer plus reinsurers also have extensive data on what they rate as high risk eg contour maps, flood maps, fire risks etc and so they price the risks. Owner risk is a further issue with past refused claims, numbers and value of claims and more all factoring in. And the usual proviso applies that if you dont tell them something they can later refuse a claim. Cushioned or protected no claims bonuses can shelter some issues even for a new dwelling. But not all of it.

I know in my post code we have a higher risk rating for hail and storms and cars garaged outside have a higher risk than those garaged inside. Houses also have a high risk for hail. Three major events in three years. Two were car claim one was roof damage

 

Claims question relates to all Policyholders, the duty to disclose claims in last 5 years is a standard question used to rate the level of risk you present as a Policyholder.

If the property has suffered severe loss or total loss, Insurers' are aware.
Insurers' use various rating indicators based on the total Policyholders they Insurer within a designated postcode. Many contributing factors when it comes to premium rating.