How does a "claims history" affect future insurance applications?

A claims history is a record of the insurance claims a policyholder has made in the past. Insurers often use this information to assess risk and determine how likely it is that a person will file a future claim. If an individual has a history of frequent or severe claims, insurers may perceive them as a higher risk. This perception can result in higher premiums because the insurer needs to compensate for the increased likelihood of future claims. In some cases, a poor claims history might lead to denial of coverage altogether, as insurers may opt not to take on the additional risk associated with that particular applicant.

In contrast, an absence of claims or a favorable claims history can often help an applicant secure lower premiums or better coverage options. Understanding the implications of a claims history is crucial when applying for insurance, as it directly influences an individual's cost and availability of coverage.