How do no claims discounts work for home insurance?

When you hear the term ‘no claims discount’ or ‘no claims bonus’, your mind probably jumps straight to car insurance. But did you know you can also benefit from no claims discounts when applying for, or renewing your home insurance?

What is a no claims discount?

If you don’t claim on your home insurance within 12 months, you’ll receive a one years’ no claims discount. This can be built up each year, but, if you make a claim, you may lose it, depending on your insurer. Having a no claims discount could give you money off your annual home insurance policy, whether you stay with the same insurer or switch to another.

Some insurers will consider claim-free years when determining the price of your policy, instead of how many years of no claims discount you have.

If you’ve earned several years of no claims discount, making a claim may only result in a step-back, but you should always check directly with your insurance provider, as this information is usually not published by insurers.

Usually, the maximum discount you can build up is five years. For one years’ no claims discount, you could get up to 30% off, and for five years’ no claims discount, you could receive up to 70%[1] off, depending on the insurer and the policy you choose.

What if I make a small claim?

No matter how big or small, if you put a claim in, you’ll lose your no claims discount. To protect your no claims discount, you may choose to pay for small repairs yourself, so you can continue to benefit from a reduced premium.

It’s worth noting that, these days, home insurers don't provide any statement of no claims discount and your renewal documents will usually just include details of any claims you’ve made.

I’ve not had home insurance for a while. Does that matter?

Insurers will look at how many years without claims you’ve had when calculating how much to charge you for your policy, but if you have a gap in your home cover, you might not be able to receive the full discount.

Are there other ways to reduce my premium?

Insurers consider a number of factors when deciding how much you should pay for your buildings insurance and/or contents insurance. These include where you live, the crime rate in your area, the value of your property/contents and how secure your home is, amongst others[2].

If you’re considering changing your locks, it’s worth opting for an insurer and police approved five-lever mortice deadlock conforming to BS3621, with the British Standard 3621 Kitemark. If you don’t currently have an alarm system, now might be the time to install one, as insurers will ask about it - and it will obviously help deter burglars, too.

You can stay with the same insurer year-on-year, but you may find that you’re paying more than you need to, if you accept your renewal quote without seeing what else is available. Shopping around, comparing prices, and checking what each policy covers by reading the policy documents is highly recommended.

What’s included as standard with one policy might not be with another, so you may need to pay more to add extras, such as accidental damage or legal cover, to your chosen policy.

Whichever policy you choose, it’s crucial that the cover you get is adequate. For instance, if your contents cover only protects £20,000 worth of belongings, but you own £40,000 worth, you wouldn’t receive the full amount back, should your belonging be damaged by flood or fire, and this could actually invalidate your policy cover. Likewise, if your home was burnt to the ground, you’d want your buildings insurance policy to cover the full rebuild costs.

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