A simples guide

Do all claims affect my no claims discount?

We all love being rewarded – treats, perks, extras – they’re all great even when we don’t really understand what we’re being treated to. A no claims discount is a bit like that. Car drivers always go on about the number of years’ worth of no claims they have, but for the uninitiated it’s all just double Dutch. Here we aim to remove all the head scratching and quizzical looks – what is a no claims discount and do all claims affect it? 

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What exactly is a no claims discount?

A no claims discount (NCD and sometimes called a ‘no claims bonus’) is a reward for every year you drive without claiming on your insurance. The ‘bonus’ part is a discount on your insurance premium. So driving for a whole year without making an insurance claim will give you one year’s worth of no claims discount.

Insurance providers will decide for themselves what sort of discount they’ll apply (worked out as a percentage off your premium). A year’s no claims discount could knock off up to 30% from your premium. If you rack up five years’ worth of NCD, you could enjoy up to 60% off. With such big discounts on offer you can see why people become obsessed with protecting their NCD.

It’s important to note though, that if you switch insurers part way through the year, you will not earn any no claims bonus if your insurance is only in force for part of the year. You can only be awarded a year’s NCD if you stick with the same insurer for the full duration of your policy (usually 12 months). You can however, usually take your NCD with you if you switch to a different insurance provider when your policy ends.

Who’s to blame?

Claims are classed as either ‘non-fault’ claims or ‘fault’ claims. As you’d imagine, non-fault claims are ones where the other driver is solely to blame. Examples could be if a driver hits you from behind whilst your car is stationary or if they ran a red light and collided into you. If your accident was as a result of a non-fault claim, your Insurance provider will try and recoup any repair or replacement costs from the other driver.

Fault claims refer to incidents where the liability (or fault) lies completely with you. However, fault claims also apply if your insurance provider can’t find someone else to blame or recover costs from another party. Instances where this might occur include if your car is vandalised or damaged and the culprit can’t be caught – it’s unfair, right? Sadly that’s how insurance rolls.

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So, do all claims affect my no claims discount or not?

It depends on the claim – some claims for example, replacement windscreens won’t usually affect your NCD – but you should check what your policy says.

A non-fault claim may still affect the cost of your premium if your insurance provider can’t recover all the costs involved from the liable party. It sounds unfair but your insurance providers will have had to fork out for the incident regardless of whose fault it was.

If you make a fault claim, then you can kiss part of your NCD goodbye. The good news is that depending on how many years NCD you have earned you may not obliterate your entire NCD in one go – you could just lose part of it.

How can I keep my NCD after an incident?

You can opt to protect your NCD so that if you make a claim then it’s not affected. But this doesn’t mean that your premium won’t increase. Say what?

Remember – a NCD is a discount off your premium, it’s not a guarantee that your premium will stay the same after an accident. Any NCD is applied after your insurance provider has worked out the flat cost of your insurance premium. So you may have five years’ worth of NCD before and after a claim if you’ve protected it, but it doesn’t stop the fundamental cost of your insurance from increasing.

Getting insured

It’s not just because accidents can happen – car insurance is a legal requirement so you may as well get the best deal going (and that doesn’t automatically mean the cheapest). By comparing the market, you get great choice and value, so what are you waiting for – let’s compare.

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