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.