Home insurance no claims discount – how does it work?

Although the phrase no claims discount (or no claims bonus) is often associated with car insurance, it’s also possible to benefit from a no claims discount on your home insurance. 

How do I get a no claims discount?

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

In order to qualify for a no claims discount (NCD), you’ll need to keep your home insurance for a continuous period. 

Is a no claims bonus for my home the same as for my car?

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

How much could I save?

After a 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%.

Remember, though, that insurance providers consider lots of different factors when calculating your insurance premium. Just having an additional year of NCD doesn’t guarantee your renewal price will be cheaper as these other factors, such as an increase in IPT (Insurance Premium Tax), can push up the price of your premium.

When should I claim on my home insurance?

As long as the situation and item you want to claim for are covered by your home insurance, then you can make a claim. However, consider how much you’re claiming for.

If you’re intending to claim for a relatively low amount, such as minor damage or the theft of a low-value item, then think carefully – you’ll lose your no claims discount and your insurance premium is likely to increase. You might prefer to replace the item out of your own pocket.

If you’re claiming for a considerable amount of damage or a high-value theft, then you’re probably better off going ahead with the claim.

Unfortunately, there’s no exact rule on whether its right for you to claim or not. Weigh up how much your excess is, take into account any possible premium increases, and ensure you’re comfortable going ahead with the claim before picking up the phone.

Making a claim on your buildings insurance will not usually affect the no claims discount on your contents insurance. The reverse is usually true as well, but always check your policy.

How can I reduce the chances of having to make a home insurance claim?

Here are some tips to reduce the risk of needing to make a buildings insurance claim:

• Install a smoke alarm
• Undertake regular maintenance checks on your property
• Insulate your pipes.

And to help avoid making a claim on contents insurance:

• Install a burglar alarm and remember to set it whenever you leave home
• Add locks to all easily accessible windows, and keep these locked when they’re not open
• Don’t leave valuables in sight
• Get a lockable safe where you can store bank statements, receipts and invoices, to help avoid identity theft
• Lock up outbuildings, such as garden sheds and garages
• Put ladders away when you’re not using them.