How is fault determined in the world of home insurance?

By: Lisa Coxon on July 13, 2023

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 driver who ignored the stop sign 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 may not be a factor 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 the case of actual negligence,” he says. “Like when someone else may have caused the loss.”

A scenario insurance companies see a lot in condos and apartments is overflowed bathtubs. This happens when someone doesn’t pay attention to the tap running in their bathtub until the tub has overflowed. By then, water may have already travelled to the units beneath them, causing significant damage.

“That's where the concept of legal liability can come into play,” says Tirschler.

If you’re the one who suffered water damage from the unit above, it’s really not up to you to make that determination. Your focus should be on dealing with your own insurance provider to get the damage to your unit covered.

Your home insurance company will then attempt to recover that loss from the person in the unit above you, who was actually responsible for it, Tirschler explains.

Learn more: What if your neighbour causes water damage to your condo?

Uncoverable claims

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 in that process, you damage the item. "Let's say that I decide to replace my laptop's battery on my own,” cites Tirschler as an example. “In the process, I accidentally short-circuited the connection, causing the battery to ignite and destroy the machine.” In that case, the laptop won’t be covered by the insurance company because the damage was a direct result of the owner manipulating the machine. (However, if the battery ignites and the fire spreads to other parts of the house, the associated fire damage will be covered by insurance.)

Generally speaking, though, home insurance companies aren’t all that fussed about who is at 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 is 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. If you’re found even partially at fault, there’s a good chance you’ll have to pay your deductible, and will see higher premiums when your policy is renewed.

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 in the first place.

“The best predictor of future claims is whether you have had any 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.”

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 insurance companies view you as a “high-risk” driver, which in turn can leave you with few options for auto insurance from significantly more expensive providers, such as the Facility Association.

Property insurance views risk differently — typically, the homeowner isn’t seen as high-risk, but the location and state of the home could be. And, says Tirschler, there are in fact home insurance providers that specifically cater to those types of homes. “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. He gives an 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,” he adds.

Of course, every insurance company determines risk and sets premiums according to their own unique underwriting guidelines. To determine your premiums, they may also look at your claims history within the last three to five years.

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

The best thing you can do to prove that 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 explains.

The second most important thing you should do, he says, is to “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 if it rains, water doesn’t get inside your home and compound the damage.

Tirschler also recommends taking as many photos as is safely possible.

They 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 (like how 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.