Home insurance no-claims discount explained
Most people know they can get a no-claims bonus for their car. But did you know you can build no-claims discount on your home insurance as well?
A no-claims bonus (NCB) gives you money off next year’s home insurance premiums, as a reward for not claiming on your policy over the previous 12 months. It could be a great way of helping to cut the cost of your cover.
It’s also sometimes referred to as a no-claims discount (NCD). We’ll be using the terms interchangeably here.
What is a home insurance no-claims bonus?
Some home insurance companies offer customers a discount as a reward for not making any buildings or contents insurance claims during a 12-month period.
This saves the insurer the cost of handling and paying those claims, and they pass the savings onto their customers. So, it might be in your interests to build up a no-claims discount because you tend to save money as well.
The longer you go without claiming, the bigger the discount you could get. Typically you get up to a maximum of four or five consecutive years’ worth of NCB.
You could get a 30% discount after going one year without claiming, rising to as much 70% for five years, for example. It depends on the policy and the insurance company you choose.
It could mean your premiums rise at a much slower pace than they would otherwise.
How do I get a no-claims discount on my home insurance?
The good news is that, on the whole, the easiest way to get a home insurance no-claims bonus is to do nothing.
So long as you have a home insurance policy for a continuous 12-month period – and don’t make any claims – you should get a year’s no-claims bonus.
Depending on your home insurance provider, you could have separate no-claims discounts for your buildings and your contents insurance.
This could be useful for tenants who don’t need buildings insurance but who want to build up a no-claims discount on their contents insurance.
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How can I protect my no-claims bonus?
The challenge with building up a no-claims discount is that it could make you reluctant to claim on the policy.
Many people might then meet the cost of smaller claims from their own pocket. This may seem rather daft - what’s the point of having insurance if you end up paying any claims yourself?
The point is that the policy is still there to meet the cost of expensive claims, such as fire, flood, burglary or a burst pipe. Here, claiming makes more sense.
By paying smaller claims yourself, you might be able to keep the cost to a minimum.
When you make a claim, you tend to lose a year or so of your no-claims bonus. Some home insurance companies let you protect your no-claims discount for an extra fee.
This protection usually allows you to make one or two claims in a year without impacting your no-claims bonus.
The best way of protecting your no-claims discount is to avoid having to make a claim on your home insurance policy in the first place. That means doing your best to deter thieves and prevent damage and accidents.
You should reduce the risk of a break-in by installing solid window and door locks, and even a burglar alarm system.
You should also keep your property maintenance up-to-date. By solving small problems today, you can prevent a bigger problem developing later.
Can I transfer my no-claims bonus if I switch home insurance providers?
Most insurance companies will accept no-claims discounts that you’ve built up with another insurer.
Because they’re portable, you’re still free to save money by shopping around for cheaper cover at renewal. When comparing online quotes, make sure you input your existing no-claims discount.
Is the no-claims bonus for my home the same as the one for my car?
You might be familiar with no-claims bonuses with your car insurance policy. It works in much the same way – for each year you don’t claim, you tend to get an extra discount on the following year’s premium.
There are a few key differences, though:
Home insurance NCB comes in two flavours – buildings and contents insurance.
Car insurance companies separate ‘fault’ and ‘non-fault’ claims. Non-fault claims are less likely to impact your NCB. Home insurance no-claims bonuses don’t make this distinction.
Some car insurance companies let named drivers build their own no-claims bonus, or let you get a full year’s worth of NCD in 10 months. Home insurance policies don’t do this.
How can I reduce the chances of making a claim on my home insurance?
The most common types of home insurance claim tend to involve:
So, the best way to avoid making a claim is to minimise the risk of any of these things happening.
Avoiding fire damage
Install smoke detectors throughout your home, and check them regularly
Get your home’s electrics and wiring checked for safety
Get a fire blanket or fire extinguisher
Make sure your house has an adequate fire escape.
Avoiding flood and storm damage
Check your roof for loose tiles
Prune or crown your any trees that are close to the house.
Avoiding theft and burglary
Make sure your door locks and windows are locked – even when you’re home
Install a burglar alarm
Stash valuable and hard-to-replace items and lock them up
Be careful who you tell when you go on holiday.
Avoiding accidental damage
Don’t bite off more than you can chew – hire a professional when the need arises
Keep all liquids far away from anything of value.