No-claims discounts and home insurance

Do you get a no-claims discount on home insurance?

You’re probably familiar with the fact that you can get a no-claims discount (NCD) on your motor insurance policy. It can also be known as a no-claims bonus.

But did you know the same applies to home insurance, too?

If you don’t make a claim on your home buildings or contents policies for an entire year, you could receive a discount on the following year’s premium.

The more years you go without making a claim, the higher the discount you can get

Depending on your insurer, discounts can start from 10% - 20% for one year no-claims and rise to a maximum of around 50%, or even higher, after five years. In some cases, the maximum discount is applied after seven years.

Insurers apply NCD to their policies to discourage people from claiming for small amounts every time something’s lost or damaged at home.

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

It works in pretty much the same way.

If you go without making a claim on your home insurance for a year, you get a discount on the cost of your insurance at renewal. And this discount grows for each year you remain claim-free, up to a maximum discount after a set number of years.

But there’s one key difference in the way an NCD on car and home insurance works.

With car insurance, your NCD is only affected by ‘fault’ claims that are the result of your own actions, or if the cost can’t be claimed from another party. ‘No-fault’ claims - where someone else is responsible for the incident that results in a motor insurance claim - won’t impact your NCD.

Both ‘fault’ and ‘no-fault’ claims are treated the same with home insurance. So, whether you make a claim for spilling red wine over your sofa or because your home has been burgled, both can impact your NCD.

What happens to my no-claims discount if I make a claim?

It depends on your home insurer’s guidelines and over how many years you’ve built up your NCD.

You could lose your NCD altogether, or see it reduced if you make a claim.

Because of this, you might decide you’re better off not bothering to make a claim for a small amount and instead pay for the repair or replacement yourself. You’ll also want to factor in how much excess you’ll need to pay when making a claim, if it’s more than it would cost you to pay out of your own pocket, it’s not worth it.

For bigger events, such as a flood or fire which could cost thousands of pounds worth of damage, or if you’re burgled and have lost lots of valuable items, it would make financial sense to make a claim, even though you’ll lose your NCD or see it reduced.

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

There’s plenty you can do to minimise the chances of having to make a claim on your home insurance.

Take good care of your home

While your home insurance won’t cover you for wear and tear on your property or its contents, it’s still important to keep on top of general home maintenance. Small problems can become bigger issues if left ignored.

Protect your home from weather damage. Check for things like loose roof tiles, broken gutters and leaky windows.

Get your boiler checked regularly and look out for plumbing issues like leaks or drips. Make sure pipes are well-insulated so they don’t freeze and burst in cold weather.

Keep large trees near your home well-maintained, too.

Improve your home security

Install a burglar alarm, security lighting and approved locks on external doors and windows. Use timer-switch lighting to come on when you’re not at home.

Protect against house fires

Fit at least one smoke alarm on each floor of your home. Keep matches and lighters away from children and be careful when using candles or if you’re a smoker.

Can I protect my no-claims discount?

Some home insurers allow you to safeguard your no-claims discount after you’ve built it up over time. You’ll need to pay an extra premium for this.

Protecting your no-claims discount means that you keep the discount you’ve built up, even if you have to make a claim.

Your insurer will have its own limit on how many claims can be made under this protection before your NCD is affected. It’s usually one or two claims during the policy term.

Does claiming on my content's insurance affect the no-claims discount on my building's insurance?

When you take out home buildings and contents cover with the same provider, you can build up NCDs on both policies.

If you make a claim on one policy, it shouldn’t impact the NCD on the other. Check with your insurer, though, if you’re unsure.

Can I transfer my no-claims discount to a different home insurer?

Yes, it’s usually possible to take your NCD with you if you switch providers. But check with the new insurer beforehand.

There may be a condition that you need to have been continuously covered to transfer your NCD.

If you’ve ceased your cover for a period (perhaps you went to live abroad or sold your home) then it may prove problematic to keep your NCD.