Home insurance excesses

mark_cycling00

Apologies for a general question.

In my last renewal I changed the excess from £250 to £350 for a few things and the cost went down a bit.

I can't imagine making a claim for anything under £1000 to be honest due to the hassle involved and having a claim on my record etc. most things would be wear and tear I would expect and not covered

Do people really claim for small amounts?

Am I missing something? Can you keep claiming for small amounts without affecting future premiums.

Thanks

eddddy

Many people would say it's a bad idea to make a small claim on a home insurance policy - and especially multiple small claims.

Over time, the increased premiums and excesses are likely to outweigh the pay outs.

Instead, only claim for 'disasters'.

In terms of the excess, say you had a small fire causing £10k worth of damage - would you want to contribute £250, or £350 or maybe £1000 towards the cost of repairs?

Aretnap

Can only speak for my own experience but when my wife's £600 bike was stolen a few years ago, claiming worked well. The increase in premium was negligible, and while I didn't know what sort of hassle you think making an insurance claim entails, £500 for a short phone call to the claims department seemed worth the hassle to me.

The problem comes with multiple small claims, so when my own significantly more expensive bike was also stolen a couple of years later, the increase in premium and the reduction in the number of insurance willing to quote became rather more significant. Still made a claim worthwhile, but it was a more marginal decision, and with hindsight we would have been better off not claiming for the cheap bike and waiting for a more expensive loss to claim: but of course that is only obvious with the benefit of hindsight.

A third claim would have been a major problem, so I wouldn't have claimed for anything less than the house burning down until the first theft at least stopped being declarable. Fortunately that never became an issue.

So yes people do make claims for relatively small amounts of money and yes the economics of doing so can make sense especially if you have a small excess, but you do have to be a bit lucky with what happens afterwards for it to work out.

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/6655089/home-insurance-excesses

Traditionally claims on Home made much less difference to premiums than claims on Motor or Pet but the type of claim (accidental damage, storm etc) also has an influence.

Excess and its impact on premiums can be odd, you'd expect the higher the excess the lower the premiums but it doesnt fully work like that for a number of reasons. In part because people who choose £0 excesses and those that choose £3,000 excesses tend to be different people and there is a correlation between that and how many claims they make.

The other problem with bumping the excess is that it becomes a self fulfilling prophecy. If you have a £100 excess most would probably say its worth making a £1,200 claim whereas if you have a £1,000 excess its probably much more borderline for many.

Some people do make tiny claims, remember one account that I saw that was making 1-2 claims a year for circa £100 payout. The premiums weren't escalating that much however once it hit X claims in the 5 year reporting period we simply declined to quote. Obviously dont know what they ended up paying elsewhere or if they secured a policy elsewhere or not.

mark_cycling00

That's interesting.

Potentially people who pick very high excesses are a bit irresponsible in general and more risky to cover.

The bike example is interesting. Yes it would be great to replace a stolen bike quickly.

Many thanks for all the replies

MyRealNameToo

https://forums.moneysavingexpert.com/discussion/comment/81882529#Comment_81882529

Insurers generally work on statistical analysis rather than ivory tower thinking of why the statistics show that claims experience for group A is 30% higher than the claims experience for group B. The only time postulation starts to happen is when you want to make a change, introduce a new factor etc for which you have no data.

I once did work on the idea of introducing mass market fixed value Motor insurance, ie you can insure your car for £20k and in the total loss event you simply get the £20k less the excess rather than the engineer valuing your car at £17k and you disputing the valuation.

We never launched the product for various reasons but we would have a median value for a car and initially reducing the value would make the premiums lower but at a point the pricing starts going back up as people were worried it may indicate financial distress which is correlated to fraud. Same with another project on using credit score as a rating factor, those with very low scores were given uplifted premiums, initially very small differences but we could then collect data and adjust to more appropriate levels. Whilst I left not long after introducing it I heard that the stats did support the thinking and the levels were adjusted but the shape was broadly in line with expectations.