No claims discounts on home insurance
Most insurance providers offer no claims discounts on home insurance.
This means that if you don’t claim over a 12 month insurance period, then you may be granted a reduction in the renewal premium you’re quoted. Then if you don’t claim for a second successive year, you can enjoy a larger reduction, and so on - a significant no claims discount can be built up in this way over up to four or five consecutive years.
Insurance providers operate no claims discounts to discourage customers making small value claims. Not claiming for a small or trivial loss will benefit the insurance provider as they will not need to pay out, and they will also not need to spend time and money administering your claim too.
Don’t worry though – it’s still a win for the customer. Although the no claims discount was introduced by insurance providers for the reasons described above, the end result for you is still that you save money.
The existence of a no claims discount on your policy can present you with a dilemma though – is it better to claim and have the insurance provider make good the loss, or is it better to meet the costs from your own pocket and avoid having to claim? If you experience a large loss, you may have no realistic alternative but to make a claim. If it’s a small loss, such as minor damage or the theft of a low value item, you should think carefully about how to proceed.