What’s a no-claims bonus?
A home insurance no-claims bonus or discount is basically recognition by the home insurance industry that you have managed to keep your house safe for at least a year and may be rewarded for that fact by getting a slightly lower premium than you would have if you had made a claim.
The more years you manage to keep your home safe and not make a claim against your home insurance, the greater the discount that will be applied to your premium. Most peoples’ homeinsurance premium will still rise, but it will not rise by nearly as much as it would if you hadn’t built up any no-claims bonus.
Different companies offer different amounts of discount for no-claims bonus years.
If you have at least five years of no-claims bonus built up then many companies will offer you anywhere between 45% and 75% off your next year’s premium. That can represent a saving of several hundreds of dollars depending on how much you would normally pay. As long as you have proof of your no-claims bonus from your insurers, you can carry it over to another insurer if you change providers on renewal.
It is worth checking the small print if you buy a combined policy for your buildings and contents cover. Sometimes, making a claim under your contents cover could mean losing your no-claims bonus for that cover and for your buildings cover.
If you have a lot of no-claims bonus saved up it is usually worth paying a bit extra on your premium to protect it. Protecting your no-claims bonus in this way will mean that if you are involved in one (or sometimes two) accidents during your policy year you will not lose your discount on the following year’s premium. But if you are involved in more accidents than allowed by your insurer then you can lose that protection.
Of course, the best way to keep your no-claims bonus discount safe is to not make a claim.
Even a minor spillage on your carpet can mean a lot of expense and you might be very tempted to claim under your home insurance. But work out what that would mean for your no-claims bonus first and see if the cost to next year’s premium would be greater than the cost of repairing the damage from your own pocket. That is especially important if your no-claims bonus discount would be lost for both your buildings and contents cover.
The best way to avoid making a claim against your home insurance is to keep your home as safe as possible.
Do this by installing a smoke alarm and not smoking indoors. Or by making sure your home is secure – lock all doors and windows, and install a burglar alarm. Consider joining a Neighborhood Watch scheme if one is run in your area, or ask your local neighborhood police team for advice about starting a new scheme.
Keep building up your no-claims bonus for cheaper home insurance year after year.