How is fault determined in the world of home insurance?

When it comes to car insurance, the concept of fault is pretty easy to wrap your head around. For example: a driver fails to stop at a stop sign and collides with another vehicle, resulting in damage. Both drivers make separate claims with their respective insurance companies and the stop-sign ignorer is determined to be at fault. As a result, they have to pay their deductible and their premiums increase upon renewal. 

Now what about home insurance? Let’s say that one morning your bagel accidentally catches fire in the toaster, charring the cupboards directly above. Or maybe your dishwasher springs a leak, resulting in water damage throughout your kitchen and surrounding rooms. Who’s at fault then?

As it turns out, fault isn’t really a feature of home insurance claims. Here’s why.

Home insurance claims: fault vs. responsibility 

“Most things that happen within the home are independent of fault,” explains Stefan Tirschler, product and underwriting manager at Square One Insurance. “When two cars are moving, you can pretty easily determine who hit whom. Within home insurance, though, fault is not a factor most of the time because most of the claims we deal with are accidental things.”

In other words, fault isn’t really something home insurance companies are looking to determine when they receive your claim.

“Where responsibility does come in, however, is in cases of actual negligence,” says Tirschler. “Like when someone else may have caused the loss.”

Most things that happen within the home are independent of fault

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

That said, it’s not really up to you, as the person who suffered water damage from the unit above, to make that determination. Your focus should be on dealing with your own insurance provider to get the damage to your unit covered. “The home insurance provider of the person below may then attempt to recover that loss from the person who was actually responsible for it,” says Tirschler.

There are two scenarios, however, in which a home insurance company may downright refuse to cover a claim:

• If you intentionally damage your home or something inside of it (because intentional damage is neither sudden nor accidental.)
• If you do something deliberate to an item of yours and throughout that process, you damage the item. Tirschler gives this example: "Let's say that I decide to try replacing my laptop's battery on my own. In the process, I accidentally short-circuit the connection, causing the battery to ignite and destroy the machine. The laptop will not be covered, because it was damaged by the work I was trying to do to it; but, if that fire spreads and damages other things in my house, that ensuing fire damage will still be covered by my policy."

Generally speaking, though, home insurance companies aren’t all that fussed about fault for the more common things that happen in a home; they’re just interested in the fact that a claim has been filed. And that’s what’s going to affect your premiums and trigger your deductible.

How does a home insurance claim affect you?

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

When you make a home insurance claim, however, whether your premiums increase or not has nothing to do with who (or what) was responsible for the damage; it’s just about the fact that a claim was made.

“The best predictor of future claims is whether any have happened in the past,” explains Tirschler. “And the impact on a home insurance premium is strictly based upon whether or not a claim happened, not necessarily whether someone was hypothetically responsible for it.” 

And unlike with auto insurance, you’ll probably still have to pay your home insurance deductible whether you were responsible for the claim or not.

“In general, the deductible is always a feature of a home insurance claim,” says Tirschler. “Since we’re not determining fault, we don’t have a way to say, ‘Well you don’t need to pay the deductible because you’re not at fault.’ We’re just not attributing fault to that decision.”

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

“There isn’t the same framework on the property side of things,” says Tirschler, “but there are home insurance providers who specifically cater to 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 might be.

While we don’t look at whether or not someone was at fault, we do look at whether a claim was attributable to the location itself

“While we don’t look at whether or not someone was at fault, we do look at whether a claim was attributable to the location itself,” says Tirschler, who gives the example of a customer who makes three sewer backup claims within a year. “The gut reaction might be, ‘Oh goodness don’t insure this person,’ but the question we ask is: are they still living in the home that has the sewer problem? And if the answer is no, then it’s no longer a problem.” 

Generally speaking, a home insurance provider will look at your claims history within the last three to five years when determining your premiums, depending on their underwriting guidelines.

How to prove you’re not responsible for a home insurance claim

The best thing you can do in order to prove you’re not responsible for the damage is to make a claim as soon as possible. An insurance adjuster will then come to your home to investigate and document the scenario, Tirschler says. 

The second most important thing you should do, Tirschler says, is “make sure the loss doesn’t get any worse.” For example, if your neighbour’s tree falls on your roof and creates a gaping hole, cover the hole as quickly as possible so that when it rains, water doesn’t get inside your home and make the damage that much worse.

It’s also advisable to snap as many photos as is safely possible. “Just like you might take pictures of the damage of your car on the side of the road,” says Tirschler. “If the neighbour’s tree fell through your house, while you’re waiting for the contractor to put a tarp over the hole, snap some pictures of the scene at the same time.” That will be helpful for when your insurance company is determining whether or not the neighbour should ultimately be paying for it, he adds.

The most important thing to do is deal with your own insurance provider right away — and let them figure out the issue of responsibility (similar to the way Ontario’s no-fault auto insurance system works). “We have the tools to figure out if someone else should ultimately pay it back,” says Tirschler.

So the next time you go to make a home insurance claim, don’t stress too much if it was a genuine accident. But do be prepared to pay your deductible and see an increase in premiums.