A simples guide

How do no claims discounts work for home insurance?

The phrase ‘no claims discount’ (NCD) or ‘no claims bonus’ is most often associated with car insurance. You may not know that it’s also possible to benefit from a no claims discount on your home insurance too. You’re not always asked by insurers how many years NCD you have or to prove that you’ve never claimed. For example, we won’t ask you to prove your no claims. All we ask is that you tell us the number of consecutive years claims free insurance you’ve held.  

How do I get a no claims discount?

If you don’t make a claim on your home insurance over a 12 month period, then you might obtain a reduction in the following year’s premium. If you don’t claim for a second successive year, you might receive a larger reduction, and so on. Home insurance policies typically allow a no claims discount to be built up over nine consecutive years.

By not claiming on your insurance for a small or trivial claim, you will benefit the insurance provider as they won’t need to pay out or spend time and money handling your claim.
Although the no claims discount was introduced by insurance providers for their own benefit, the end result for you is still that you save money in the long term.

Unlike car insurance, home insurance providers do not distinguish between ‘fault’ and ‘no fault’ claims when it comes to no claims discounts. Put simply, if you don’t claim in a 12 month period, you can expect to benefit from the discount.

How much could I save?

After one year, a no claims discount could save you up to 30% on your premium. After five years, the saving could be as much as 70%.

Unlike car insurance, where you may be able to have a break in your cover for up to 18 months and keep the no claims discount, you need to maintain your home insurance for a continuous period.

no claims discount for home insurance
NCD for home insurance - savings jar

So what should I do if I suffer a loss?

If you suffer a major loss that could be covered by your home insurance, you might want to think about making the claim if you can’t cover the cost of repair yourself. However, if it’s a small loss, such as minor damage or the theft of a low value item, you need to think carefully about your options, you might want to replace the item out of your own pocket. Consider whether you want the insurance provider to make good your loss, or whether you would prefer to receive a reduction in next year’s premium instead. You may also want to consider the total excess relative to the value of the item you’re claiming for. If you claim you’ll lose your NCD and your premium is likely to increase.

Making a claim on your buildings insurance will not usually affect the no claims discount on your contents insurance, and the reverse is usually true as well – but check the detail of an individual policy before buying.

Take all reasonable measures to reduce the likelihood of a claim

To avoid the dilemma described above of whether to make a small value claim, you should take all possible steps to reduce the risk of you suffering loss or damage.
To reduce the risk of needing to make a buildings insurance claim:

• Install a smoke alarm
• Keep your property well maintained
• Insulate your pipes

To reduce the risk of needing to make a contents insurance claim:

• Install a burglar alarm, and remember to set it whenever you leave your home.
• Add locks to all easily accessible windows, and keep these locked when they’re not open.
• Don’t leave valuables in sight of the window.
• Get a lockable safe where you can store bank statements, receipts and invoices, and any other information that could be used to steal your identity.
• Don’t forget outbuildings such as garden sheds and garages – install locks here as well. Many burglars know that residents are less likely to think about keeping outbuildings secure.
• Put ladders away when you are not using them.

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