no-claim bonus

No claim bonus explained

no-claim bonus

A no claim discount (NCD), sometimes referred to as a no claim bonus, is a discount your insurer can apply to the price of your car insurance policy for every year that you haven’t made a claim.

The amount of money it’s worth varies for each insurer, but the more consecutive years you go without making a claim, the less of a risk you are to the insurer, so the greater the discount you’re ly to get. 

How do I build up a no claim bonus?

You’ll build up a no claim discount for every consecutive year that you don’t make a claim on your car insurance.

Technically, you can build up an unlimited number of years without making a claim, though most insurers will only take the first 5 years of no claims into account, but some might offer more.

You might also find that some insurers allow you to earn a full year's no claim discount in 10 months rather than 12. This is sometimes called an ‘accelerated no claim bonus’.

What happens to my no claim bonus if I make a claim?

If you make a claim on your policy, or someone makes a claim against your policy and your insurer has had to pay out, then you’ll ly lose your no claim discount, or at least part of it.

Whether you lose your no claim discount if a claim is made isn’t always to do with who’s at fault. For example, if you’re hit by an uninsured driver and it wasn’t your fault, some insurers could still remove your no claim discount as they’ve had to pay out on the claim.

With our car insurance though, you’ll get uninsured driver cover as part of our comprehensive insurance.

Different insurance companies will have different rules around no claim discounts, so make sure you check this before you take out your policy.

Can I protect my no claim bonus?

Many insurers will offer you the option to protect your no claim discount. This means you’ll pay an additional amount as part of your premium so not to lose your discount if you do need to make a claim.

And when you protect your no claim discount, there’s often a limit to how many claims you can make in a single year without it being affected.

Each insurer will have different rules around no claims bonus protection, so double check these before you take out your policy.

And remember that protecting your no claims discount doesn’t guarantee that your premium won’t increase – only that you'll still receive the discount on your premium.

How long does no claim bonus last?

If you’ve had a break from driving for a while, you may still be to apply your no claim discount to a new policy you take out.

Most insurers will allow you to use a no claim discount if you’ve been absent from driving for 2 years or less – though some may extend this to 3 years.

If you’ve been living abroad or driving a company car and want to transfer your no claim discount, you’ll often be asked to provide written evidence of your insurance history. Though whether your no claim bonus is applied will be at the discretion of your insurer.

Can I build up a no claim bonus on a MultiCar policy?

While this depends on the insurance provider you have, most companies will treat each vehicle or driver separately under a MultiCar policy.

For example, with our MultiCar insurance, each vehicle builds up its own no claim discount, so if one is involved in an accident and you need to make a claim, the others won’t be affected.

Check with your provider when you take out your policy to see how they treat NCD on a multi-vehicle policy.

Can I build up a no claim bonus as a named driver?

Again, this really depends on your insurance provider.

Generally, named drivers don’t build up NCB unless they’re the main driver on the policy – as it’s often the main driver’s driving record that determines the level of risk of the policy.

However, this does vary between some companies. It’s definitely worth checking this when you add a named driver to your car insurance poicy – as even though they might build up a no claim bonus with one company, it’s not always possible to transfer this to another provider in the future.

How can I get proof of my no claim bonus?

If you decide to change your insurance provider – or take out a new policy after a break from driving – you’ll need to provide proof of your NCB if you want to apply it to your new policy.

Most insurers will send you proof of your no claim discount automatically either when you renew your policy, or if you choose to cancel it. Though some may require you to request this separately over the phone, by post or on their website.

Remember that if you cancel your current policy, you’ll have up to 2 years to use your no claim discount – or you’ll lose it altogether. 

What happens to my no claim bonus if I change my car?

Most insurers will allow you to transfer your no claim discount to another car, but if you make a change in the middle of a year, you might not get a bonus for that particular year.

With our car insurance, each policyholder will earn a separate no claim discount for each vehicle they insure. 


No-claims bonus explained

no-claim bonus

What is a no-claims bonus? | How do I build my NCB? | If I make a claim, how is my NCB affected? | How can I get proof of NCB? | Should I protect my NCB? | What happens when I change my car or policy? | Can named drivers build up NCB? | Does NCB apply to work vehicles? | How to transfer your company car NCB | Can I transfer NCB from overseas?

A no-claims bonus (NCB), or no-claims discount, is a count of the number of years in which you haven’t made a claim on your car insurance policy.

The amount that its worth varies from insurer to insurer, but a NCB of five years or more, for example, is ly to give you a significant discount on your premium. 

For every year you’re insured without making a claim, you’ll earn another year's NCB. Some companies offer accelerated policies where you can earn a bonus in 10 months rather than 12.

You can build up an unlimited number of NCB, but most insurers will only use a maximum of five years when working out a discount. 

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If you make a claim on your policy where your insurer pays out, you’ll generally lose some, or all, of your no-claims bonus.

But if you’re hit by another car and it’s agreed that you weren’t at fault, your insurer may be able to reclaim the payout from the other car’s insurer and your NCB may not be affected.

In cases where fault can’t be agreed on, insurers may split the cost of the claims and both drivers’ NCB could be affected. This includes if your car is stolen or damaged by bad weather.

If you pay for a new policy with a reduced NCB and are later found not at fault, you can usually get your NCB reinstated and a refund on the extra premium you paid.

READ MORE: When to make a claim on your car insurance

How can I get proof of NCB?

When you decide to change your insurer, you’ll need proof of your NCB in order to transfer it over to the new one.

Your existing insurance provider may include your proof of no claims in the letter they send you before your car insurance is due for renewal – so you may want to hang on to this even if you decide to switch.

When you switch, you may also receive proof of your NCB in the cancelation letter you’ll get from your previous insurer.

However, other insurers may not include it anywhere at all, so in this instance you’ll have to request it by phone, post, or by completing a form on their site. 

Protecting your NCB allows you to have a certain amount of “at fault” accidents without affecting the bonus. So if you have an accident, the NCB remains intact even if your insurer can’t claim their costs back.  Each insurance company has different rules regarding how many claims are allowed. 

This won’t necessarily stop your premiums going up after a claim, as insurers use your claims history to calculate premiums, with your NCB discount calculated at the end.

Any remaining NCB you have after the claim may lower your new premium, but there’s no guarantee that it’ll be lower than the previous year.

READ MORE: Car insurance jargon buster

No claims bonuses can usually be transferred to another car, but if you switch insurers before the year is up, you won’t get the NCB for that year. You can't use your no-claims bonus on more than one car.

Insurers should provide proof of your bonus at the end of your policy term. You can pass this on to your next provider when you switch.

Some insurers may provide your proof of no claims in the car insurance renewal letter they send you. If it's not there, you can call your insurer and ask them to send it.

If you cancel your policy, you have two years to reuse your NCB, otherwise it expires and you start from scratch.

READ MORE: How to change your car insurance policy

Named drivers aren’t usually allowed to build up their own NCB, as it’s the main driver’s good driving record that the claim-free history will be supporting.

Letting named drivers earn their own NCB could leave the system open to abuse, as you could build up a no-claims discount without ever getting behind the wheel.

There are some insurers that offer NCB for named drivers, but they can’t guarantee this will be recognised by other insurers. This is, however, becoming more common.

READ MORE: How to add a driver to your car insurance policy

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Commercial policies and fleet vehicles don’t typically let you build up NCB, but some insurers will take your experience driving a company car into account when calculating your premium.

If your car is insured for you to use for «social, domestic and pleasure» purposes, as well as with work, then it’s ly you can build NCB. Always check though, as each insurer is different.

READ MORE: Business car insurance

If you’ve recently given up your company vehicle, you should be able to use any NCB built up on that car.

But the NCB is only ly to be transferable if you were named on your company’s insurance policy for a particular car and for your use only.

Usually, when changing insurers, you need proof of any NCB you’ve built up from your last provider, but with company policies, many insurers will settle for confirmation from your employer. 

It's worth asking, but most UK insurers don’t allow NCB built overseas to be transferred to a UK car insurance policy due to different driving laws and the administration involved.

READ MORE: Imported car insurance

First published 01 April 2016


No Claims Bonus / Discount Guide and Rules Explained

no-claim bonus

When it comes to the running costs of a car, particularly insurance, there’s nothing better than having driving experience and age on your side.

 Car insurance, especially for new and young drivers is often the most expensive running cost of a car.

There are various methods that can be used to obtain cheaper car insurance, one method that particularly rewards careful and safe drivers is a no claims bonus (NCB), or no claims discount (NCD) as it’s also known.

Car insurance providers clearly prefer motorists that do not claim against their car insurance policy as it saves them money. To encourage drivers not to claim, they offer a no claims bonus, or otherwise known as a no claims discount.

What is a no claims bonus

A no claims bonus is simply a reward in the form of a discount off a car insurance policy. As the name suggests, it benefits drivers who do not make a claim against their car insurance.

Unless your no claims bonus is protected, it is lost if you make a claim

How does no claims bonus work

For every year that you hold a current and active car insurance policy, you will receive a percentage discount off of your insurance premium, providing you do not make a claim.

How is a no claims bonus worked out

The amount of discount obtained each year for a no claims bonus varies depending on the insurer. It is however typically worked out on a similar basis. Here is an example of how no claims bonus is worked out and how much you can save by not making a claim:

Number of years no claim bonus heldDiscount Earned
1 year claim free driving30%
2 year claim free driving40%
3 year claim free driving50%
4 year claim free driving60%
5 year claim free driving65%
6 year claim free driving65 to 75%
7 year claim free driving65 to 75%
8 year claim free driving65 to 75%
9 year claim free driving65 to 75%

As the table shows, just one years’ worth of no claims bonus can save a considerable amount. No claims bonus is particularly beneficial to young and new drivers who face the highest insurance premiums.

A young driver can easily expect to pay anywhere from £1,000 to £1,500 or more for their firsts years car insurance.

With just one years no claims bonus, the following years premium could be reduced by anywhere between £300 to £450, clearly a huge discount.

How much no claims bonus can I get

This is again dependent on the insurer, but many providers offer a maximum no claims bonus of 75% discount off the total cost of annual car insurance.

How many years no claims bonus can I get

This also varies depending on the insurer. Some insurers offer a maximum of five years no claims bonus, whilst others exceed this up to nine years. The more years no claims bonus you accumulate doesn’t necessarily provide a larger percentage discount. It’s therefore best to check with a provider the maximum no claims percentage they offer and how many years it takes to accumulate this.

How much no claims bonus do I have

You can contact your car insurance provider who will provide details for the amount of no claims bonus percentage you have, alternatively, insurance renewal documentation display the level of no claims you are entitled to for the following year.

Will I lose no claims bonus if it is not my fault

Other than minor claims, any claim you make on your insurance policy may result in you losing some or all of your no claims bonus, unless it is protected.

This may appear unfair especially if the incident is not your fault, but it’s a no claims bonus you receive and not a no fault bonus. It may be worth considering protecting your no claims bonus. You may however not lose all of your no claims bonus.

How much you lose depends on the insurance providers terms and how many claims free discount years you have to your name.

So as an example, if you have four years no claims bonus and make one claim within a year, you may lose two years of your no claims bonus, leaving you with two years on renewal.

As a general rule, two years are taken off of your no claims discount per claim. Some insurance providers also permit you to make one or two claims per policy year that do not affect your NCD.

This may however be subject to the amount being claimed.

Can I protect my no claims discount

Almost all car insurance providers offer a service that allows their policy holders to protect their no claims discount. Typically you will have had to of built up four or five years’ worth of no claims discount before you become eligible for the NCD protection service.

How do I keep my no claims discount / bonus

To keep your no claims bonus you have two options. You will have needed to take out no claims bonus protection prior to the incident, or if it is you considering claiming on your insurance and not a third party, simply do not claim.

You will need to work out whether it is cost effective to either claim or pay the costs yourself. As an example, say you have a minor accident and scratch the paint work on your car.

The damage is superficial with no dents. You obtain a quote to get it repaired that comes in at £350.

If you have a car insurance excess of £250, the insurance company will therefor only pay out £100 of your claim.

That’s still £100 so could well be worth making the claim. If however for example you have built up a four years no claims bonus, you may face losing two of those years on your next renewal, losing you 30% discount off your insurance premium. How much 30% will cost you is of course relative to how much your insurance is.

Plus it still doesn’t end there. Insurance providers will generally increase your premium on renewal in the event of a claim. They are a business after all and want to claw back any loss if at all possible.

So you need to take all immediate costs into account, but more importantly potential future costs that may be incurred due to a claim. Even if your no claims bonus is protected, be highly cautious of the impact that making a claim will have on future insurance premiums.

How much does no claims protection cost

Once again, it is variable depending on the insurer. Generally the cost of no claims protection is within 5 and 15% of the total cost of the insurance premium. How much it costs to protect no claims can vary depending on the insurer and the cost of your premium.

Is it worth protecting no claims bonus

Building up a five or more year no claims discount is one of the most valuable assets in keeping car insurance costs as cheap as possible. As it’s taken so long to obtain your NCD, it must make sense to protect it?

You could almost think of no claims protection as insurance for your insurance, which as bizarre as it sounds, has its advantages and disadvantages. Regardless of whether an incident is your fault or not, if you claim on your insurance, especially if you make many claims, your insurance cost will significantly increase whether your no claims is protected or not.

It’s also worth noting that many insurance providers will only permit a certain amount of claims to be made per policy year, even on a protected no claims discount. If claims are exceeded, policyholders may see their protected no claims reduced or even lost.

Essentially, self-assess the risk that you may make a claim. If you cover high mileage each year for example, you are higher risk. It’s not just your own driving ability that should concern you, if you are hit by a non-insured driver and you need to claim, this will affect your no claims.

On the other hand, a low mileage car owner who stores their vehicle in a locked garage will be low risk. A claim due to vehicle vandalism for example will affect no claims. Keeping a vehicle garaged will of course make this low risk.

If you consider yourself low risk, paying out extra for no claims protection over a number of years without making a claim may ultimately cost you more. Base the decision on whether it is worth protecting your no claims bonus on your current situation, plus previous driving history.

Questions to ask about no claims bonus whilst obtaining quotes

No claims bonus is important, it can save you a fortune, so asking the correct questions is also important. Whilst changing insurance companies, some of the following questions may help you decide if that is the best company to go with:

  • What is the maximum percentage no claims discount you offer and how many years does it take to obtain this?
  • Do you offer no claims protection and how much does it cost?
  • Do you offer no claims discount on a named driver?
  • Do you offer no claims discount to provisional licence holders?

What affects no claims bonus

In basic terms, unless a no claims bonus is protected, the policy holder may lose some or all of their no claims if

An example could be that:

  • your vehicle was hit by an uninsured driver
  • received damage by an unknown source
  • was vandalised whilst parked on a street

No claims bonus as a named driver

If you are intending on adding a named driver (or second driver) to your insurance policy, it could be worth asking if the named driver is able to build their own no claims. Some insurance providers reserve this for the policy holders, whilst other extend this also to a named driver.

As building a no claims bonus is one of the most effective means of cutting the costs of car insurance, named driver no claims bonus is especially important for a young named driver who intends on taking out their own car insurance at a later date.

No claims bonus on a provisional licence

It is possible to earn a no claims bonus whilst driving on a provisional licence. This varies across providers, but no claims is especially important for young a new drivers.

 If you intend on purchasing your own vehicle, to earn no claims, you may need to insure the vehicle under your own name if on provisional licence to obtain a no claims discount.

Although the initial costs may prove a little expensive, earning a 30% no claims discount within one year of driving could ultimately save you more.

Can you get no claims bonus on two cars

Typically you can only use your no claims bonus on one car. It may be possible however if the two cars are insured on the same policy, though this is subject to the insurance providers terms.

Can you get any no claims bonus on third party fire & theft?

You can earn a no claims bonus on any type of car insurance, whether it be:

Does a no claims bonus expire or run out

Yes it does, but the period in which it becomes invalid or expires varies considerably depending on the insurance provider or policy type.

 An insurance provider may for example allow a no claims bonus to still be valid even if there has been a break on insurance cover for up to three years. Other providers this limit may be two years or 12 months only.

Some insurance providers may not accept a no claims discount if there has been any break with active car insurance at all.

Proving your no claims bonus

If you are changing car insurance companies which is often the case due to a better quote, you will of course want to take along all your no claims bonus that you have acquired. The new insurance provider will require proof of your no claims, and yes they may actually check up on this.

From your old insurance provider, you will have received a letter of invitation to renew your insurance. This may also be in e-mail form, but it’s this letter that will detail the amount of no claims bonus you are entitled to for the following annual renewal. You will need to e-mail or send your new provider this letter.


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