There's No Claims Bonus, No Claim Discount, No Claims Bonus Protection, a whole load of rules and exclusions - do you find it all rather confusing?
You're not the only one!
Fortunately we're here to help you out. In this article, we explain what a no claims bonus is, how you can earn your bonus, and whether it's worth paying extra to protect it.
Table of Contents
What is a No-Claim Bonus?
For every year that you're insured to drive a car but you don't make a claim on your insurance, an insurer gives you a No Claims Bonus. You could see it as a way of rewarding you for good and safe driving.
In fact, it's a useful way for insurance companies to build your record as a driver into their pricing scheme.
You must pay attention to the small print because even if a claim isn't your fault, it could lose you your bonus.
These bonuses are also called No Claim Discounts (NCD) - you'll be given a discount against the insurance premium that you would otherwise pay.
How does No-Claim Bonus work?
Every year, your insurer will notify you (usually on the renewal letter) how many years' bonus you have.
When they calculate the renewal premium, they'll work out the price and then take off a percentage discount depending on how many years you have.
If you get a quote from another insurer, you tell them how many years no claims bonus you have and they will also give you a discount. How much discount they give for how many years is up to them and depends on each provider's own criteria.
Note that you may not be able to get a no claims bonus on third party cover.
You'll also usually be able to get a no claim discount only if you're the main driver of the car. Only a few insurers offer a no claim discount for named drivers.
How do I build my NCB?
You build your no claim discount through having insured your car without making a claim. Each year that you continue without making a claim, another year's bonus is added.
If you make a claim, but the insurer is able to recover its payout from someone else, you'll usually keep your NCB. For instance, if you are involved in an accident that's someone else's fault, and their insurer pays to repair your car, you won't lose your NCB.
However, if your car is stolen, and your insurer pays out, you will lose your NCB. The same could happen if you're involved in an accident but the other driver isn't insured and can't afford to pay for the damage.
The No Claim Bonus belongs to you as a driver. It doesn't belong to your car. But you can only use it on one vehicle at a time. If you decide to change car, you transfer your NCB to the insurance on the new car.
But if a Named Driver on your policy crashes your car, you could still lose your NCB.
How much can No Claims Bonus reduce my car insurance?
No Claims Bonus can have a big impact on the cost of your car insurance, because it's the best way an insurer has of determining whether you're a good risk for them to insure.
That's particularly the case in the early years. Some insurers will offer 30% off after one year's NCB, but the extra discount levels off after three or four years. For many insurers, the maximum NCB they'll take into account is 5. The savings tend to tail off after year 3 or 4.
But every insurer makes their own decisions about how much NCB to offer for each year. So we can't say "one year equals a third off," but the table below gives typical ranges of No Claims Discount that you might expect to see.
|Number of years NCB||Potential discount|
You should also note that if you have an accident, even if you don't make a claim, insurers might put your premium up. The No Claims Bonus isn't the only factor that's used when calculating your premium.
Compare best No Claims Discount
Some of the best promises and discount rates are explained in the table below.
|Insurance company||When you won't lose your NCB||Discounts available|
|Uninsured driver promise - if you're hit by an uninsured drive you won't forfeit your NCB|
You won't lose your NCB for claims if the car is vandalised
|Up to 65% NCB|
|You won't lose your NCB for accidents caused by potholes or flood, for theft or damage while the car is parked||-|
|Uninsured driver promise||30% for one year NCB|
60% after 5 years
|Uninsured driver promise||80% discount for 9 years NCB (drivers over 25 only)|
|Uninsured driver promise||75% discount for 10 years NCB|
|Windscreen, window and sunroof claims don't affect NCB||-|
|Uninsured driver promise||Up to 37% for 9 years NCB|
|Windscreen and window claims don't affect NCB (but sunroof claims do)||Up to 50% for 5 years NCB|
Do all insurers offer No Claims Bonus?
Yes, all insurers offer No Claims Bonus. But all of them have different rules.
For instance some won't offer a discount to drivers under a certain age. Others don't offer a discount till you get to your second year of NCB. Some will accept claim-free years built up as a named driver or driving a company car, and others won't.
You really need to make sure you know the exact terms and conditions. Fortunately, we can help take a lot of the work out of doing the comparison.
What happens to my NCB if I make a claim?
Your NCB basically reflects whether the insurer had to pay out or not. If an accident's not your fault, your insurer will usually get their money back from the other driver's insurance, so you keep your NCB. If your insurer loses money (typically, if an accident's your fault or the perpetrator can't be traced), you'll lose your NCB. But there are exceptions.
If you're hit by a driver who's not insured, your insurer won't get paid - and you'll lose your NCB, unless your policy gives you an uninsured driver promise. It's worth looking for an insurance policy with this feature.
If the accident is your fault - well, sorry, but your NCB is gone. Serves you right.
Unfortunately, you'll also lose your NCB if your car is stolen. And that's tough, but that's the way it is - because your insurer will pay out for a new car.
Some insurers let you make certain types of claim without affecting your NCB. For instance, LV= doesn't take your NCB away if you claim for a chipped windscreen - though you'll have to pay an excess of £95 on your claim.
By the way, if you're in an accident and lose your NCB, but later on, it's found that it wasn't your fault after all, your NCB will be restated. Insurers may be tough, but they're also fair.
Is protecting my NCB worth it?
Some insurers including Admiral and Diamond offer NCD Protection, a kind of NCD insurance. This allows you a certain number of claims without losing your NCB, but it's an added extra on your policy so you have to pay for it.
Is it worth the price? It's difficult to tell. Remember that the impact of your No Claims Bonus is greatest in the early years, so it could only take you two years after an accident to get back to a high level of no claims discount.
You also need to factor in that while you might not lose your discount, the insurer might increase the basic premium because you've had an accident, so you'd still get a discount but on a higher base cost. It's difficult to give a hard and fast answer, so you need to compare quotes with and without NCB protection.
No Claims Bonus Protection - how many claims can you make without losing your no claims bonus?
|Insurer||No-Claim Bonus protection|
|2 claims in 3 years|
|1 claim in a single year|
|2 claims in 3 years|
|2 claims in 3 years|
|2 claims in 3 years|
|2 claims in 3 years|
Can named drivers get No Claims Bonus?
Some policies allow a named driver as well as the main driver on a car to build up a No Claims Bonus.
A second driver no claims bonus can be particularly useful for youngsters who've been driving their parent's car for a while before buying (and insuring) their own. It can also be useful if you've been driving a company vehicle, though to transfer the NCB you need to be replacing the company car with your own - you can't have the NCB on both.
No claims bonus for named drivers is more difficult to transfer than if you're a main driver. You might find you can only use your named driver no claims bonus on your own car, when you buy one, if you take out a policy with the same insurer.
Can I use my NCB on several cars?
No. You can only use your NCB on one car. If you own a second car, your NCB won't be available for insurance on it.
However, you may be able to secure savings by getting a multi-car insurance.
How can I get proof of my No Claims Bonus?
Many insurers (like Drive Like A Girl and Tesco Bank) will show your No Claims Bonus on your renewal letter. But not all of them.
If you switch insurer, you'll have to ask your previous insurer to send you separate No Claims Bonus proof. That might involve a telephone call, but increasingly, insurers will let you download your proof of No Claims Bonus from the self-service customer portal.
Can I transfer my NCB if I switch insurer?
You should be able to transfer your NCB if you switch insurer.
You'll need to have a no claims bonus proof to show your new insurer. In many cases the proof of no claims will be on your renewal letter. If not, you may have to ask your insurer to provide you with a letter.
There are a few cases in which you might not be able to transfer your NCB, for instance:
- if you're using a named driver no claim on someone else's car
- if you have an accelerated NCD.
Some, but not all, insurance companies will allow you to transfer NCB in these circumstances. Even so, a named driver no claims discount is worth having - you'll be ahead of the curve, and after you've had your NCB on your own car for a year you'll be able to transfer elsewhere.
Can I transfer a No Claims Bonus from abroad?
Unfortunately, no insurer will allow you to transfer a No Claims Discount from abroad. You'll have to start from scratch.
Can I transfer my company car NCB?
If you are the only driver of a company car, you might be able to use your years of claim-free driving to get a discount when you buy and insure your own car.
It's not, strictly, a no-claim bonus but it will have the same effect on your premium.
Not all insurers will let you do this. You'll need a letter from the insurer of your company car confirming:
- that you had sole use of the car,
- that you could use it for your own domestic and leisure driving as well as for commuting, and
- the number of years you've been driving without making a claim.
You'll also need to confirm that you have given up the company car.
You cannot claim any discount if you have been driving a commercial vehicle like a van, or if you've been using a car pool.
Does my NCB expire?
An NCB will eventually expire if you do not have an insure a car for some time, generally, two years.
So for instance if you spend a year on a round-the-world trip, or just sell your old car and don't get round to buying a new one for six months or so, you'll still be able to use your NCB from your last car. Most insurers will recognise a NCB up to 24 months old; some insurers will even recognise an NCB that's up to three years old.
But if you leave it longer than that, your NCB will expire for good, and you'll have to build it up all over again from the beginning.
What is a No Claims Bonus Accelerator?
To get a No Claims Bonus you usually have to complete a whole twelve months' insurance without making a claim, and you'll get it at the end of that year. With a No Claims Bonus Accelerator, you'll get it after 10 months.
That's really useful for new drivers who can build up their NCB more quickly.
However, you might find it difficult to switch insurer, as not all insurers will accept an accelerated No Claims Bonus. So it might be more cost effective to stick with a regular policy and wait the extra couple of months. You'll need to do a proper comparison of quotes to work out whether it's worth your while.