What Is a No Claims Discount on Home Insurance?

When you're protecting your home, insurance is a valuable safety net. But did you know that good homeowner can also reward you financially in the long term? One way this is done is through a No Claims Discount (NCD) on your house insurance policy. If you've never made a claim, or haven't made one in years, you might be rewarded with a big discount on your premium.

But what is a no claims discount, and how does it operate for home insurance? In this article, we will unscramble what NCD means, how it operates for home insurance, and how you can gain the most benefit while staying safe.

What Is a No Claims Discount?

A No Claims Discount (NCD), or No Claims Bonus (NCB), is an insurance bonus that is given to policyholders who have made no claims within a certain time frame. It is most commonly applied to car insurance but is issued by most house insurers as well—especially in the UK, Europe, and increasingly in the UAE.

The concept is simple: the longer you can leave it before you make a claim on your house insurance, the bigger reduction you'll get in your renewal premium. The reward incentivizes avoiding frivolous or unnecessary claims and prudent ownership of property.

How Does It Work?

The discount is given annually at policy renewal. This is a rough estimate of how the NCD might accumulate:

1 year claims free: 10% discount

2 years claims free: 15–20% discount

3+ years claims free: Up to 30% (dependent on insurer)

Every insurer varies, but the rule is the same: the more years with no claims, the bigger the savings.

Let's assume your home insurance premium is AED 1,000 for two years without claims, you can pay only 20% for NCD, i.e., AED 800 for renewal. That adds up to substantial savings in the long run.

Is It Offered by Every Insurance Company?

Not all home insurance companies offer a no claims discount, especially in some regions. But it's becoming more common in the UAE as online insurers and platforms compete on value, transparency, and customer experience.

Before you buy or renew a policy, it's worth asking these questions:

Do you offer a no claims discount?

How is the discount calculated?

What will happen to my NCD if I make a claim?

Can I transfer my NCD to another company?

Such insurers as Shory and other UAE online-led insurers are simplifying these products and making discounts more transparent.

What Kind of Claims Lower the NCD?

Generally, any claim you put in on your home insurance can reduce or reset your NCD. These are:

Water damage

Fire or smoke damage

Theft or burglary

Accidental damage

But other insurers don't dismiss very small claims, or give "NCD protection" as an add-on option. That way, you can claim a year for a minor thing and not lose your discount—ideal if you desire guarantee without penalty.

Should You Avoid Making Claims to Protect Your NCD

This is a common question. While there may be temptation not to make a claim to retain your discount, the decision should be made considering the cost of damage against your current NCD and policy excess (what you pay yourself before the insurer takes over the rest of the bill).

For example, in case you have a 20% NCD of AED 200 of savings and your repair costs are AED 500, it might be economically viable to handle it yourself and keep your discount. But for serious events like fire, flooding, or burglary, making the claim is the prudent thing to do—although it reinstates your NCD.

Can You Transfer Your NCD Between Insurers?

Yes, in the majority of cases. If you change to a new home insurance provider, you can normally transfer your no claims bonus by presenting evidence from your previous insurer. This will avoid your losing your bonus when you go shopping around for a improved deal.

Make sure you request a No Claims Certificate or equivalent proof when cancelling or transferring policies.

Conclusion

A No Claims Discount on your house insurance is a simple but effective way of saving money just by staying claim-free. It's a thanks to thrifty homeowners who maintain and care for their home, and it can lead to significant long-term savings.

If you are in the UAE or any other geography where digital insurers are becoming popular, look for those companies who explicitly explain their NCD policy and allow you to self-service your policy online. Platforms like Shory and many others are making it easier than ever.

Before renewing your policy or switching your provider, ask them about their no claims discount facilities—and use your clean record for your advantage.