How does no claims discount work for home insurance?

If you don't make a claim on your insurance policy, you may be able to benefit from what is known as a no claims discount, commonly referred to as NCD, or no claims bonus. The more years you record without making a claim, the better the discount you're potentially entitled to. While NCD is often discussed when looking at car insurance, it's also applicable for home insurance too. This guide takes a closer look at how a no claims discount works, how you can protect your NCD, and how to build it up.


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How to build up NCD

Building up your no claims discount - or NCD - over a number of years can really help you save money on your home insurance policy. You will usually get a saving if you go for a year or more without making a claim on your insurance, but you'll earn a more significant discount if you can record several years without making a claim.

If you don't need to make a claim at all, then building up your NCD is a straightforward process. However, it's obviously very difficult to predict when you might suffer accidental damage to possessions in your home, or you run into other problems with your property. Alternatively you have the option to pay for your repairs or replacements yourself instead of making a claim and potentially losing NCD. Another option is to protect your no claims discount - we'll look at that in more detail later.


How much does a no claims bonus save?

Your insurer will be able to advise how much your no claims bonus will save you - generally, if you have more than five years of NCD you should expect to see a level of discount. 

There are other steps you can take to try to prevent a claim. Practical measures will help to protect your home and the possessions inside your house. Upgrading the security of your house by installing a burglar alarm and ensuring all windows are lockable could prevent access by intruders. Ensuring there is a smoke alarm fitted in the property improves safety and acts as an early warning to a potential fire.

Keeping valuable items hidden from open view and in safe places also helps. In terms of protecting against accidental damage, keeping pipes insulated during winter and cold weather can prevent burst pipes.

Also, make sure you maintain the property in good condition and upkeep minor repairs when needed. If you have a faulty lock, don't live with it - get it repaired. If your house has leaky guttering, get it fixed. Minor issues can turn into more significant problems if ignored. In fact, it's often a condition of your insurance policy that you keep your property in a good state of repair - insurers won't pay out claims which are caused due to lack of maintenance.

Another option to protect your no claims bonus is to insure single items separately. For example, you might want to take out insurance on your mobile phone, tablet or laptop. If damage occurs to any of them, you can get the item repaired or replaced without needing to make a claim on your home insurance.


Weighing up - should I claim?

When you have a large no claims discount it can be tempting to avoid claiming at all and asking the question, 'is it worth claiming on home insurance?' So, if an item is damaged or broken, you'll inevitably be faced with weighing up the decision - should I claim or not?

It needs serious thought. If the damage is slight or a minor item is broken, you have the option to pay for these repairs or replacements yourself and therefore avoiding a claim that may result in you losing your no claims discount.

However, for larger problems that would otherwise result in a sizeable bill - such as flood or water damage to carpets and furniture, a kitchen fire, or a burglary in which several high-value items were stolen - you may decide to make a claim. This, after all, is why we have home insurance in the first place; to support us when we  most need it.


Home insurance and NCDs - FAQs

What if something major happens - should I hesitate?

No. While you obviously want to maintain any no claims discount in a best case scenario, the very purpose of having insurance is to protect your home and possessions if something major happens. If your bathroom floods, causing major damage to your flooring and downstairs ceiling, there's little point in holding off on making a claim.

How else can I reduce the need to claim?

There are a range of things you can do to reduce the need to claim on your insurance. 

These include ensuring the security and safety of your home is as thorough as possible - you should have a smoke alarm installed, and ideally burglar alarms, too. Windows and doors should have locks in good working order, and used when no-one is in the property.

Maintenance of the property is important. Don't neglect minor repairs as small problems can easily become more serious - and expensive to fix - if not tackled in reasonable time. For tasks around the home that are more complicated, use a professional; don't start re-wiring the house yourself and installing a new boiler - appoint a qualified electrician and plumber. Using a professional should avoid problems further down the line.

Is buildings NCD different to contents NCD?

Many people have their buildings and contents insurance with the same insurance provider. They cover different aspects of your property - buildings covers the house itself, while contents covers everything inside it. You can usually build up a no claims discount on both policies, and a claim on one won't impact on the other - though this can vary according to insurance provider.

What can't I claim for?

A common belief is to assume that you can claim for anything on our home insurance policy. That would be a mistake. While RAC buildings insurance is comprehensive, you won't be covered for all aspects - including general wear and tear, pollution and damage caused by vermin and insects. And, unless you add accidental damage to your policy, you won't be covered for any damage you have caused yourself - such as drilling through a water pipe. RAC Home Insurance comes with optional extras you can add to your policy - check your policy documents to check for limitations and exclusions.

Can I claim while keeping my NCD?

As always, it's best to check the finer details with your insurer - they will be able to tell you your claim limit - in terms of value and volume - without invalidating your no claims discount.