How a Claim Affects Your Australian Insurance Premium at Renewal

Key Takeaway

Making a claim on your Australian insurance policy typically increases your premium at renewal. The size of the increase depends on your cover type, claim amount, claims history, and whether you lose a no-claim discount. Car and contents insurance usually see the largest jumps (15% to 40%), while life and income protection premiums are less affected by individual claims. Understanding these differences helps you decide when claiming is worth the long-term cost.

How Claims Impact Different Insurance Types in Australia

When you lodge a claim, insurers reassess your risk profile at renewal. This reassessment varies significantly across cover types. According to the Insurance Council of Australia, insurers use claims data to calculate future risk, and a recent claim signals higher probability of future claims (Insurance Council of Australia, 2026). The fundamental principle, as explained in foundational texts such as Principles of Finance, is that premiums reflect assessed risk, and claims history is a primary risk indicator.

Comparison Table: Premium Impact by Cover Type

Cover Type	Typical Premium Increase	No-Claim Discount Loss	Duration of Impact	Key Factors
Car (Comprehensive)	20% to 40%	Yes, up to 65% discount lost	3 to 5 years	Claim size, at-fault status, claims history
Car (Third Party)	15% to 30%	Yes, smaller discount pool	3 to 5 years	At-fault determination, claim frequency
Home (Building)	15% to 35%	Sometimes, varies by insurer	3 to 5 years	Claim type (storm, fire, theft), property location
Contents Insurance	20% to 35%	Sometimes	3 to 5 years	Claim size, security measures, item type
Life Insurance	0% to 5% (minimal)	No	Usually none	Underwriting at application sets rate
Income Protection	0% to 10%	No	May affect future claims	Claim duration, occupation class

Detailed Analysis by Insurance Type

Car Insurance: Highest Impact

Car insurance premiums face the steepest increases after a claim. ASIC MoneySmart notes that comprehensive car insurance typically includes a no-claim discount structure, where policyholders earn up to 65% discount for claim-free years (MoneySmart, 2026). A single at-fault claim can reset this discount entirely.

Pros of claiming:

• Covers repair costs that exceed your excess
• Protects you from third-party liability claims
• May cover hire car and towing expenses

Cons of claiming:

• Immediate loss of no-claim discount
• Premium increases lasting three to five years
• Total cost over time may exceed claim payout for minor damage

When the impact is largest: At-fault accidents, multiple claims within three years, or claims in high-risk postcodes (such as areas with high theft or hail damage rates).

Home and Contents Insurance: Moderate to High Impact

Home and contents claims typically result in 15% to 35% premium increases. The impact varies by claim type. According to Finder Australia, storm and flood claims in cyclone-prone regions or flood zones often trigger larger increases than theft claims (Finder, 2026).

Pros of claiming:

• Coverage for major losses (fire, storm, flood damage)
• Replacement of stolen or damaged belongings
• Temporary accommodation costs after severe damage

Cons of claiming:

• Premium increases at renewal
• Potential difficulty obtaining cover after multiple claims
• Some insurers may exclude specific perils after a claim

When the impact is largest: Properties in high-risk areas (flood zones, bushfire regions, cyclone-prone coastal areas), claims for preventable damage (such as lack of maintenance), or multiple claims within five years.

Life and Income Protection Insurance: Minimal to No Impact

Life insurance and income protection policies work differently. Premiums are set at underwriting based on your age, health, occupation, and lifestyle. Making a claim (a death benefit payout for life cover, or an income protection payment during illness or injury) does not typically increase premiums for existing policies.

Read also: How Your Insurance Excess Choice Affects Premiums and Claims in Australia

Pros of claiming:

• No direct premium penalty
• Cover designed to be used when needed
• Stepped premiums rise with age, not claims

Cons of claiming:

• Future applications for additional cover may face higher premiums or exclusions
• Income protection claims may affect waiting periods or benefit periods for future claims
• Long-term claims can trigger insurer reviews

When the impact is largest: Applying for new or additional cover after a claim history, or when changing insurers.

Recommendations by Reader Profile

For Young Drivers or New Policyholders

If you are building your no-claim discount, avoid claiming for minor damage that costs less than A$2,000 above your excess. The long-term premium increase often exceeds the immediate payout. Focus on protecting your discount until you reach the maximum level.

For Property Owners in High-Risk Areas

If your property is in a cyclone, flood, or bushfire zone, expect higher premium increases after weather-related claims. Consider higher excess levels to reduce premiums, and maintain detailed records of preventative measures (such as storm shutters, flood barriers) to demonstrate risk mitigation to your insurer.

For Established Policyholders with Maximum Discounts

If you hold a maximum no-claim discount (typically earned after five or more claim-free years), weigh the cost of losing that discount against your claim amount. For car insurance, a A$5,000 claim might cost you A$8,000 or more in lost discounts over the following years.

For Income Protection and Life Cover Holders

Claim when you need to. These covers are designed to replace income or provide financial security, and claiming does not penalise your current policy. Read your PDS carefully to understand waiting periods, benefit periods, and any conditions that might affect future claims.

Frequently Asked Questions

Does every claim increase my premium? Most claims on car, home, and contents policies will increase your premium at renewal or result in loss of no-claim discounts. Life and income protection policies typically do not increase premiums based on claims.

How long does a claim affect my premium? For car, home, and contents insurance, a claim usually impacts your premium for three to five years. Each insurer sets its own timeframe; check your PDS for details.

Can I avoid a premium increase if the claim was not my fault? For car insurance, some insurers offer protection for not-at-fault claims if you can provide the other driver’s details and they accept liability. However, many insurers still apply an increase or reduce your no-claim discount even for not-at-fault claims.

Should I pay for minor damage myself? If the repair cost is only slightly higher than your excess, or if the total cost over time (including lost discounts and premium increases) exceeds the claim payout, paying out of pocket is often the better financial decision.

Conclusion

The impact of a claim on your Australian insurance premium varies significantly by cover type. Car and contents insurance see the largest increases due to no-claim discount structures and risk reassessment, while life and income protection premiums remain largely unaffected by claims. Before lodging a claim, calculate the total cost including excess, lost discounts, and future premium increases, and compare it to paying the cost yourself. For major losses, always claim. For minor damage, run the numbers first. Review your policy’s Product Disclosure Statement (PDS) and Target Market Determination (TMD) to understand your insurer’s specific claims and renewal policies, and consider obtaining advice from a licensed insurance adviser for your personal situation.

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General Advice Warning: This article provides general information only and does not take into account your objectives, financial situation, or needs. Before making any insurance decision, consider whether the information is appropriate for you, read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD), and consider seeking personal advice from a licensed insurance adviser. Premium impacts, no-claim discount structures, and renewal terms vary by insurer and by state or territory. Always verify current details with your insurer or a licensed adviser before deciding whether to lodge a claim.