No claims discount for home insurance policies
Key takeaways
- A no-claims discount (NCD) rewards you for not making home insurance claims
- The longer you go claim-free, the bigger your potential discount
- You can usually keep your NCD when switching insurers, but you may need proof
- Claims can reduce or remove your discount unless you have protection
Many people are familiar with the concept of a no claims discount (also known as a no claims bonus) for car insurance policies, but fewer people realise that they can also build up a no claims discount to save on their home insurance in many cases.
What is a no claims discount on home insurance?
A no-claims discount is a reduction on your home insurance premium offered by your insurer if you don’t make any claims. The longer you remain claim-free, the bigger your discount can become (up to a limit).
You don’t need to stay with the same insurer. You can usually get proof of your no-claims discount from your current provider. They’ll send a letter or email showing how many claim-free years you’ve built, which you can then show to a new insurer to get the same discount.
Is a no-claims discount for home insurance the same as for car insurance?
Yes, a no-claims discount for home insurance is very similar to one for car insurance. Both reward you for not claiming on your policy. If you remain claim-free, insurers often reduce the cost of your premium.
However, the rules can differ between home and car insurance. Each insurer sets its own discount levels and eligibility criteria.
One of the main differences is that home insurers usually don’t distinguish between fault (you caused the damage) and non-fault claims (someone else caused it). In practice, this means any claim you make on your home insurance can reduce or remove your discount, even if the damage wasn’t your fault.
While many drivers know about a no claims discount for car insurance, fewer people realise similar discounts can apply to home insurance. Understanding how these discounts work could help you reduce the cost of your home insurance over time.
How much can I save with a no-claims discount?
Savings can vary by insurer, but here’s a simple guide on how much you could save with a home insurance no -claims discount:
| Claim-free years(s) | NCD discount |
|---|---|
| 1 | 5-15% |
| 2 | 20-30% |
| 3 | 30-40% |
| 4 | 40-50% |
| 5+ | 50%+ |
How can I get a no-claims discount on my home insurance?
You can earn a no claims discount by not making claims on your home insurance policy. Each claim-free year usually earns you a percentage discount on your premium. The exact amount depends on the insurer and policy.
Insurers offer this discount because fewer claims mean lower costs for them. They pass some of those savings back to customers.
Your premium is calculated first using factors like your property value, location risk and home insurance claims history. Your no-claims discount is then applied as a percentage reduction to that premium.
What happens to your NCD if you make a claim?
Making a claim usually reduces the years of discount you’ve built up, but it may not always remove your NCD entirely - this depends on your insurer. For example:
- 1 claim may cost 1–2 years’ worth of discount
- 2 claims could cut it by half or more
- 3+ claims usually removes the discount entirely
Example:
If you currently have four claim-free years (40% discount) and make one claim, your discount might drop to two years’ worth (20%). With two claims, it could fall to around one year (10%), and three or more claims would likely remove the discount entirely.
How does a no claims discount work for buildings and contents insurance?
You can often build up a separate NCD for both buildings and contents insurance, although this depends on your insurer.
If you make a claim on one type of cover, it won’t usually affect the NCD on the other. For example, a contents insurance claim may not impact your buildings insurance discount.
Some insurers also apply different discount levels or structures to buildings and contents insurance, so the amount of discount you earn may not be the same for each type of cover.
FAQs
Does making a claim always remove my no-claims discount?
Not always. Some insurers reduce your discount rather than removing it completely. If you have NCD protection, you may keep your full discount.
Can I protect my no claims discount on home insurance?
Yes. If you’ve built several claim-free years, no claims discount protection lets you make a claim without losing your discount.
Can I transfer my home insurance no-claims discount?
Often, yes. Many insurers accept proof of your NCD from another provider when you switch policies.
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