How's fault determined in the realm of home insurance?

When you are looking at car insurance, the idea of fault is fairly easy to wrap your face around. For instance: a driver fails to stop at a stop sign and collides with another vehicle, leading to damage. Both drivers make separate claims with their respective insurance providers and also the stop-sign ignorer is decided to be to blame. Consequently, they need to pay their deductible and their premiums increase upon renewal.

Now how about property insurance? Assume one morning your bagel accidentally catches fire in the toaster, charring the cupboards directly above. Maybe dishwasher springs a leak, resulting in water damage throughout your kitchen area and surrounding rooms. Who's at fault then?

As as it happens, fault isn't actually an element of home insurance claims. Here's why.

Home insurance claims: fault vs. responsibility

“Most stuff that happen inside the home are separate from fault,” explains Stefan Tirschler, product and underwriting manager at Square One Insurance. “When two cars are moving, you are able to pretty easily determine who hit whom. Within property insurance, though, fault isn't a factor most of the time because most of the claims we cope with are accidental things.”

In short, fault isn't really something property insurance companies are seeking to determine once they receive your claim.

“Where responsibility does are available in, however, is in cases of actual negligence,” says Tirschler. “Like when someone else might have caused losing.”

Most things that happen inside the home are independent of fault

A scenario Square One sees a lot in condos and apartments is overflowed bathtubs. This occurs when someone forgets to pay attention to the bath while it's filling up, and by time they notice it's overflowed, the water has travelled towards the units beneath them and caused significant damage. “That's in which the concept for legal liability can come into play,” says Tirschler.

That said, it isn't really your decision, because the individual who suffered water damage from the unit above, to make that determination. Your focus should be on coping with your personal insurance provider to obtain the damage to your unit covered. “The property insurance provider of the individual below may then make an effort to recover that loss in the person who was really accountable for it,” says Tirschler.

There are a couple of scenarios, however, where a home insurance company may downright won't cover a claim:

• If you intentionally damage your house or something within it (because intentional damage is neither sudden nor accidental.)
• If you do something deliberate for an item of yours and throughout that process, you damage the item. Tirschler gives this example: “Let's state that I decide to try replacing my laptop's battery on my own. In the process, I accidentally short-circuit the bond, causing the battery to ignite and destroy the device. The laptop will not be covered, since it was damaged through the work I had been attempting to do in order to it; but, in the event that fire spreads and damages other activities in my house, that ensuing fire damage will still be covered by my policy.”

Generally speaking, though, property insurance companies aren't everything fussed about fault for that more common stuff that happen in a home; they're just interested in the fact that claims continues to be filed. And that is what's going to affect your premiums and trigger your deductible.

How does a house claim affect you?

When you make an auto insurance claim, fault is arguably the most important part of the process. Even if you're found partially at fault, there's a good chance you will need to pay your deductible, and can see higher premiums when your policy renews.

When you make a home insurance claim, however, whether your premiums increase or otherwise is not to do with who (or what) was accountable for the harm; it is simply about the fact that the claim was made.

“The best predictor of future claims is whether any have happened in the past,” explains Tirschler. “And the outcome on the property insurance fees are strictly based on whether or not a claim happened, certainly not whether someone was hypothetically accountable for it.”

And unlike with auto insurance, might even have to pay your house allowable whether you had been responsible for the claim or otherwise.

“In general, the deductible is always an element of a property insurance claim,” says Tirschler. “Since we're not determining fault, we do not have a way to say, 'Well you don't have to spend the money for deductible because you're not to blame.' We're just not attributing fault to that particular decision.”

With auto insurance, multiple at-fault claims could make insurers view you like a “high-risk” driver, which in turn can leave you with few choices for auto insurance which are much more expensive, such as the Facility Association.

“There isn't the same framework around the property aspect,” says Tirschler, “but you will find property insurance providers who specifically focus on niche risks or high-risk homes that can't get coverage elsewhere.” Put simply, you won't be seen as the high-risk, but your home may be.

While we do not look at whether someone what food was in fault, we do look at whether claims was due to the place itself

“While we do not take a look at whether or not someone what food was in fault, we all do look at whether a claim was due to the place itself,” says Tirschler, who gives the illustration of a person who makes three sewer backup claims within a year. “The gut reaction might be, 'Oh goodness don't insure this person,' however the question we ask is: could they be living in your home which has the sewer problem? And when the reply is no, then it's no more a problem.”

Generally speaking, a house insurance provider will look at the claims history within the last 3 to 5 years when managing your premiums, depending on their underwriting guidelines.

How to prove you're not accountable for a home insurance claim

The smartest thing that you can do in order to prove you aren't responsible for the harm is to claim as quickly as possible. An insurance coverage adjuster will arrived at your home to investigate and document the scenario, Tirschler says.

The second most essential thing you want to do, Tirschler says, is “make sure losing does not get any worse.” For example, in case your neighbour's tree falls in your roof and helps to create a gaping hole, cover the opening as soon as possible so that if this rains, water doesn't get in your home making the harm that much worse.

It's also better to snap as many photos as is safely possible. “Just like you usually takes pictures of the damage of your vehicle on the side of the road,” says Tirschler. “If the neighbour's tree fell through your house, while you are awaiting the contractor to put a tarp over the hole, snap some pictures of the scene simultaneously.” That will be helpful for when your insurance company is determining set up neighbour should ultimately be paying for this, he adds.

The most important thing to do is cope with your own insurance provider right away – and allow them to figure out the issue of responsibility (like the way Ontario's no-fault car insurance system works). “We possess the tools to figure out when someone should ultimately repay it,” says Tirschler.

So the next time you want to make a home insurance claim, don't stress too much if it would be a genuine accident. But do be prepared to pay your deductible and find out an increase in premiums.